UK CAPE Ratio
Current UK CAPE
As of August 2026 · ratio
Rough estimate. This single-country CAPE is approximated by rolling the EWU ETF price from a recent anchor — free data has no per-country 10-year earnings — so treat it as a directional gauge, not a measured CAPE. It is bounded and is not used in the headline Global CAPE. See the methodology.
By Dominic Roe · Data Engineer & Business Intelligence Developer Updated August 2026
Is United Kingdom cheap right now?
✓ Real · EWUOn 4 of 4 trailing multiples, United Kingdom equities are priced below the all-world index (VT). These are current, fund-reported figures — not the estimated CAPE series charted below.
| Measure | United Kingdom | World |
|---|---|---|
| P/E | 15.7 | 22.6 |
| P/B | 2.31 | 3.32 |
| P/S | 1.62 | 2.55 |
| Dividend yield | 3.09% | 1.59% |
| ROE (quality) | 14.7% | 14.7% |
Green = cheaper than the world index on that measure. ROE is shown as context, not cheapness: a lower return on equity means part of a cheap multiple may be deserved rather than a bargain.
Against its own history, United Kingdom's estimated CAPE of 22.0 sits at the 25th percentile — historically cheap for United Kingdom — below most of its own past readings.
Multiples as of August 2026.
- Historical average
- 27.9
- 365 months
- Historical median
- 25.8
- Percentile rank
- 25th percentile
- vs full history
- All-time range
- 16.2 – 40.4
- Last updated
- August 2026
- since April 1996
Understanding this metric
What is it?
The Cyclically Adjusted Price-to-Earnings ratio (CAPE), also called the Shiller P/E or PE10, measures how expensive UK equities are relative to their inflation-adjusted earnings over the prior ten years. By averaging a decade of real earnings it smooths out the booms and busts of the business cycle, giving a steadier read on valuation than a one-year P/E.
How is it calculated?
CAPE is computed by dividing the real (inflation-adjusted) price of the UK equity market by the average of its real earnings over the trailing ten years. Both price and earnings are expressed in today's currency using a consumer price index, so a CAPE of 25 means investors are paying 25 times a smoothed, inflation-adjusted measure of annual earnings.
Historical interpretation
Historically a high CAPE has been associated with lower subsequent long-run real returns, and a low CAPE with higher returns. It is a valuation gauge, not a market-timing signal: rich valuations can persist or grow richer for years. Compare today's reading to the metric's own history — its average, median and percentile rank — rather than to a single "fair value" number. The UK is the developed world's perennial value market, and a textbook case for reading CAPE beside the live trailing multiples shown above. UK equities trade at a discount to the all-world index on every price multiple and offer roughly double its dividend yield — a "cheap" signature that is partly structural: the FTSE is weighted toward banks, energy majors, miners, pharmaceuticals and consumer staples rather than the high-margin technology that dominates the US index, and it has carried a persistent discount since the 2016 Brexit vote as domestic pension and insurance funds rotated away from UK shares. The offset is quality and growth — the UK earns a lower return on equity and grows more slowly than the US — so part of the discount is deserved rather than a free lunch. The most useful read combines the CAPE percentile (how the UK is priced against its OWN history) with those cross-market multiples before concluding the market is cheap.
Limitations
CAPE has well-known limitations. Accounting standards, payout policies, profit margins, interest rates and sector composition all change over decades, which can shift the "normal" range upward or downward. The ten-year window still includes unusual periods (such as a deep recession) that distort earnings. CAPE says little about the next year and should be combined with other metrics rather than used in isolation. This series is an ESTIMATE, not a measured CAPE. Free data does not include long-history, per-country 10-year real earnings, so it is built by anchoring a recent CAPE level and rolling it through history using the inflation-adjusted price of the iShares MSCI United Kingdom ETF (EWU) with a steady real-earnings trend removed. History only extends as far back as the country ETF (typically the late 1990s/2000s). Treat it as a directional valuation gauge. See the methodology documentation for sources and assumptions.
Frequently asked questions
Is the UK stock market cheap right now?
On the current, fund-reported multiples shown above, UK equities trade below the all-world index on price-to-earnings, price-to-book and price-to-sales and yield roughly double its dividend — cheap on every measure. Read that against the CAPE percentile (how the UK is priced versus its own history), and remember that a low multiple partly reflects the FTSE's value-sector mix and slower growth, not pure undervaluation.
Why is the UK stock market so cheap?
A mix of structure and sentiment. The FTSE is weighted toward banks, energy majors, miners, pharmaceuticals and consumer staples — low-multiple sectors almost everywhere — and carries little of the high-margin technology that lifts the US index. On top of that the market has traded at a persistent 'UK discount' since the 2016 Brexit vote, as domestic pension and insurance funds cut their home-market weighting. Cheap valuations like these can persist for years.
How does the UK compare to the US and the world?
The UK trades at lower price-to-earnings, price-to-book and price-to-sales multiples and a higher dividend yield than both the US and the all-world index, but it also earns a lower return on equity and grows more slowly. The valuation gap and the quality/growth gap move together, which is why the snapshot above shows ROE as context beside the cheapness measures.
Is the UK CAPE figure a measured ratio?
No. Only the US CAPE is a measured series (from Robert Shiller). The UK CAPE here is an estimate built from a free ETF price proxy (EWU) and a recent anchor, so treat it as a directional valuation gauge. The trailing P/E, P/B, P/S and dividend yield shown above, however, are real, current figures reported by the country's tracker fund.
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