Goldman Sachs: UK Assets Are Undervalued, Recommends Buying
Claire Weston
Goldman Sachs argues UK equities and gilts are excessively punished by the market, with the FTSE 100 offering a 6% total shareholder return — its core case is that the bad news is priced in while structural strengths in services, AI and defence are not.
How cheap are UK assets, exactly?
The FTSE 100's total shareholder return — dividends plus buybacks — hits 6%, a clear discount to US equities even after adjusting for sector mix and growth expectations.
UK 10-year gilt yields sit at the highest level among major developed economies. This means → the market is penalising UK bonds beyond what fundamentals warrant.
In plain terms = high dividends on stocks, high interest on bonds, yet low prices — Goldman sees that gap as the opportunity.
What holds the UK economy up?
The UK is the world's second-largest services exporter, behind only the US, with services as a share of GDP above the developed-market average.
This means → when tariff wars escalate and Chinese manufacturing exports intensify, a services-led economy takes less of the hit.
London's financial sector contributes roughly 8% of GDP and nearly 1.5 million jobs, retaining its position as Europe's dominant financial centre post-Brexit.
AI, life sciences, defence — where does medium-term growth come from?
Goldman ranks the UK's AI industry third globally, after the US and China, supported by top research institutions, London's AI start-up cluster and the English-language advantage.
The bank estimates broad AI adoption could lift UK productivity by up to 15% over a decade and has already raised its long-term UK growth forecast accordingly.
On defence, rising NATO spending opens export growth opportunities for UK aerospace, naval systems and next-generation technology.
What about the risks? What does Goldman itself say?
Goldman acknowledges weak growth, disappointing productivity trends, and inflation running above the Bank of England's target for a fifth consecutive year.
Its core argument: those headwinds are already fully priced in, while structural strengths remain under-recognised.
In plain terms = the market has catalogued every British problem but hasn't priced the upside — Goldman is betting on that gap closing.
Content is for reference only, not financial advice.