Investor confidence fell by 10 points to 75, or by 11.2 per cent, ahead of the Budget at the end of October, according to Hargreaves Lansdown’s Investor Confidence Index.

It also found that confidence in UK economic growth declined by nearly 20 per cent this month.

Hargreaves Lansdown said that the looming Budget in the UK seemed to have “spooked” investors, who are concerned about rising capital gains tax (CGT) bills and potential pension reforms.

The only positive sector was Japan, where confidence improved slightly, while investors were a little more likely to buy passive funds than they were in the previous month.

“Overall, with the likelihood of many treats coming from this Budget being low, it feels like it could be a pretty scary time for UK investors,” commented Hargreaves Lansdown head of fund research, Victoria Hasler.

“Confidence was largely flat in North America, despite the upcoming Presidential election, as investors continue to have faith in the big tech names which have been dominating market returns there.

“Confidence in UK economic growth has fallen by 14 points (19.8 per cent) from September, and this is after a fall of almost the same magnitude the month before.

“It would seem that investors’ initial enthusiasm for the potential stability of a new government has waned, and they now have less faith in the new government’s ability to grow the economy, at least until they have seen the details of the upcoming Budget.

“The Sentiment Market Index (how likely people are to invest compared to the previous month) also fell, although there was a bit of an uptick specifically in investors’ likelihood of buying passive funds.

“This may have something to do with the struggle that active managers have had to outperform in the US given the outsize influence of the big tech names on index performance.”

---