British shares are the world’s cheapest, but profits are soaring: buy

Jean Roche, also of Schroders, said changes to UK stock market rules could also boost shares by encouraging more technology firms to list in London. She argued that a relaxation of regulations that denied entry into the FTSE’s major indices for companies such as Deliveroo, the online food delivery firm, and Wise, the money transfer service, would lure more tech companies.

“Ongoing reforms mean more tech-focused stocks could qualify for index inclusion, helping to dispel the myth that the UK market is dominated by ‘old economy’ companies,” she said.

But not all investors are convinced. Stephen Yiu, manager of the £1.1bn Blue Whale Growth fund, argued that, while British shares were cheap, companies listed in London were of lower quality than those in the US.

“Sales at American companies have risen by 50pc in the past decade but have remained flat in Britain. They are also far more profitable, with margins at 45pc on average compared with 30pc in the UK,” he added.

Mr Yiu admitted that the domestic market could enjoy a short-term boost from rising interest rates but said London-listed companies did not represent good long-term investments.

He said: “Banks, oil companies and miners are not going to suddenly become reliable fast-growing businesses, even if they do make more money over a short period.”