Dig through TikTok for Hannah Fry videos and you may come across one in which the maths professor shares five words scientifically proven to make you happier. Just repeat to yourself: ‘These are the good days’.

It reminds me of a poem by Henry Normal, Better Days. If you do not know it, Google it (and then keep repeating it to yourself as you walk to work in the rain, in the dark).

The opening lines are: ‘Midwinter we yearn for spring. Midnight we look to the dawn. We hope for better days.’ It ends with the warning that when we look back we might just realise these are the better days.

I have been thinking about this a lot lately. For much of the past couple of years people have been asking me what the catalyst for a recovery in UK stock markets will be. 

They have been putting off investing because of a succession of concerns, including Brexit, Liz Truss’s short-lived government and the General Election. Now the October Budget has been added to the list.

There is always a reason for not investing. Markets climb a wall of worry. And the danger is that we allow that worry to stop us participating. As Normal tells us: ‘We spend our whole lives searching for better days.’ In the process of looking ahead, we miss them in the present. 

For UK investors these might well be the better days. In the past year the FTSE All-Share is up nearly 17%. 

The value opportunity in the UK is so well rehearsed now that I will not dwell on it. But the UK is still overshadowed by the S&P 500, which has delivered 22.7% in the past year.

So we still see dreadful outflows from UK equities – more than £1bn every month in the first half of this year, according to Deutsche Numis. That is on top of £10bn of outflows in 2023 and outflows every year since 2016. 

You can see why I might have been scrolling the internet and social media to lift my spirits!

And then it came – the latest fund manager survey. I almost fell off my chair – although that is probably a sign of how low my expectations are these days. The September 2024 data shows that global fund managers have been adding to the UK, and not only that it is now a (modest) overweight position, having been underweight for several years.  

Pension funds and retail investors may still be sitting on their hands, waiting for Rachel Reeves to deliver her Budget and for the next thing to worry about after that. But the data would suggest that global fund managers have begun to recognise some of the positives the UK equity market has to offer. So let us consider some reasons to be cheerful.

The UK economy is growing – up 0.6% in the second quarter, according to the Office for National Statistics. The chancellor has been talking up the problems she inherited, but if we look at the GDP data and at the recent strength of sterling, it presents a rather different picture. 

We are not talking about stellar growth, but at the beginning of the year consensus expectations were for a meagre 0.3% UK GDP growth in 2024, and expectations have been slowly grinding up to (a whopping) 1.1%. This is a very similar pattern seen to last year, when what was originally forecast to be a recession year ended up being approximately flat. There seems to be a resilience to the UK economy that is being missed in forecasts.

The unemployment rate is almost as low as it has been in 50 years, and annual regular earnings growth is up around 5%. So, after several years of real incomes falling, they are rising again. This presents challenges for those companies for which labour is a major part of the cost base, but it is healthy for the economy. It means that consumers who have, on average, built up savings in recent years may now have the confidence to go out and spend (although the current uncertainty ahead of the Budget is notably unhelpful).

Finally, we have some political stability. You may or may not have been happy with the election result – and how you feel may be influenced by what happens in the coming Budget. But the UK now looks like a safe haven as we chart the rise of populist politics in Europe and the US. 

So there are several reasons for thinking that tomorrow may be brighter. But I still think there is a serious risk that by the time we recognise the catalyst it will be too late. Because, in truth, there is seldom a single catalyst behind a recovery. It is usually a series of barely perceptible events.

Look beyond the worries and you may come to the same conclusion as Fry, Normal and now me. These are the better days. I hope there will be many more. 

Laura Foll is co-manager of the Henderson Opportunities Trust (HOT ), Lowland (LWI ), Law Debenture (LWDB ) investment trusts and Janus Henderson UK Equity Income & Growth Fund . 

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