In the last 30 years three of the most quoted UK Share Indices – the FTSE100, the FTSE250 and the FTSEAll-Share (which comprises around 1000 companies traded on the London Stock Exchange) – have increased at an average annual rate of around 4.1%, 7.0% and 4.5% respectively. Using the GDP deflator to correcting for inflation over the same period the average growth rates were 1.3%, 1.7% and 4.3% respectively.
Over the more recent period from 2000 to 2019 the average nominal rate of growth of the FTSE100 has not been sufficient to prevent the real rate of growth being negative. Similar share indices of a number of other countries have also shown negative real growth over the same period.
Following the financial crisis beginning in 2007, Share Price indices fell sharply throughout the world. But there is little evidence that markets ‘saw the crisis coming.’ Had they done so the indices would have fallen before – not when and after – the crisis happened.