Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, notes: "Far from bringing an added dose of confidence to investors, ‘Freedom Day’ appears to be a setback. Investors’ confidence in the UK has dropped by 5% in July, when compared to June, a steeper fall than the 2% registered on average for regions around the globe.

"The sharply rising COVID infection rates across the country, and concerns about fresh easing of restrictions, is likely to be behind the drop, which is identified in the HL monthly investor confidence survey.

"Worries are mounting about what the lifting of social distancing rules will mean for economic recovery if the virus spreads more rapidly. Already many industries from hospitality to manufacturing are struggling to cope with high levels of absence as staff are pinged by the test and trace app, leading to the closure of some venues and a drop in output.

"The confusion surrounding quarantine and testing rules for international travel is also leading to fresh uncertainty about the prospects for the aviation and tourism industries, which have been struggling through the worst crisis in their history. The lack of warning about the need for travellers from France to isolate for ten days from today has thrown holiday plans into fresh mass chaos, with hopes of a boost to summer bookings evaporating.

"Amid concerns that infection rates could derail the recovery are worries about inflation heating up and the knock on effect of rising interest rates. 65% of investors believe interest rates will be higher in a year’s time compared to 60% last month. That is the highest level since January 2019. More than a quarter (26%) now believe they could be higher in six months, compared to 24% in June 2021.

"Economies have been re-opening with an energy that once seemed unlikely in the depths of the pandemic, which is pushing up inflation. In addition, the recession left supply chains broken around the world, leading to some shortages. Companies have also slashed investment during the crisis, so the ability to increase production is limited, which has the effect of pushing up prices even further.

"Central banks are largely still talking as a team, stressing that these effects are transitory, kicking the ball of monetary easing down the pitch. But it’s clear investors, watching from the side lines, are increasingly nervous that price rises are likely to linger for longer. More fear that a swifter rolling back of mass stimulus programmes and the spectre of rising interest rates could dampen economic growth and asset valuations."