Britain’s stock market has lost its position as Europe’s most-valued, as the economic downturn weighs on UK companies, data shows.
France has taken the top spot as the combined value of its companies’ shares have been boosted by currency movements and demand for French luxury goods.
It is the first time Paris has overtaken London since records began in 2003, according to data from Bloomberg.
The UK is expected to fall into recession this year as inflation rises.
The combined value of British shares is now around $2.821 trillion (£2.3 trillion), while France’s are worth around $2.823 trillion, Bloomberg calculates.
Shares in the UK’s medium sized companies have been doing particularly badly, as consumers rein in their spending and businesses struggle with higher costs.
London’s FTSE 250 share index – which is made up of medium sized companies – has slumped by almost 17% in the last 12 months.
One of the biggest fallers has been pub chain Mitchells and Butlers, which lost over 37% of its share value in the past year. Meanwhile, gambling company 888 has fallen 70% and retailer Marks & Spencer is down 40%.
UK firms have also been hit by a slump in the pound since Liz Truss’s mini-budget, which has made it more expensive to import goods and raw materials.
By contrast, currency movements have worked in favour of French companies, Bloomberg said. France’s stock market has also been boosted by its luxury goods makers, which have seen a bounce-back in demand from China.
Shares in LVMH, which owns fashion brand Louis Vuitton, have surged 22% in the last six months, while Hermes is up 37%.
Chinese shoppers accounted for around 35% of global demand for luxury goods before the pandemic, according to Bloomberg data.
As in other countries, energy and food prices have soared in the UK this year in part due to the war in Ukraine.
Many British homeowners have also seen a sharp rise in mortgage costs after the mini-Budget drove up UK borrowing costs.
It has added to existing problems in the economy, including a persistently weak pound and weaker trade since Brexit. The UK is the only G7 nation whose economy is still smaller than it was before the pandemic.
Between July and September, the UK economy shrunk by 0.2% and the Bank of England has warned the country faces its longest recession since records began.
Last year Amsterdam ousted London as the largest financial trading centre in Europe, although this was based on the total value of traded shares rather than companies.