At last, Rachel Reeves wins thanks to the rising FTSE 100

This is the first time that the FTSE 100 index of leading shares has surpassed 9,000

That's not nearly as impressive as it seems.

It is likely that chancellor Rachel Reeves was thinking about the economy's prospects for the coming months when she was spotted crying in the House of Commons. So far, there has been minimal indication of the "growth, growth, growth" she promised to produce. The economy was halted in its tracks by her budget last fall. The non-doms ran away. Employers halt hiring. Her tenure in office has had a bleak start, and it is unclear how long she will be able to hold her position.

She does have one accomplishment, though. This week, the FTSE 100 made a record-breaking high, barely breaking through 9,000. Although it quickly dropped back, it is still much higher than it was at the beginning of the year. Later in the year, it might even breach the psychologically massive 10,000 barrier. It might not be long before Reeves displays an index chart to demonstrate her success and assert that international investors support her policies.

The FTSE 100 is still far behind.

However, in actuality, there is nothing to rejoice over. After years of weak performance, the FTSE is only now beginning to catch up to global markets. It took 25 years for the index to rise by just 2,000 points, since it reached 6,930 in December 1999. In contrast, over the past 25 years, Germany's Dax index has tripled. In the US, the tech-heavy Nasdaq has more than six-fold increased in value over the same period, while the S&P 500 has increased fourfold. Every other significant index globally has surpassed the FTSE 100, although the Paris-based CAC-40 has performed nearly as poorly. In fact, the index should be between 20,000 and 30,000 by now just to have kept up with its peers. Given that, 9,000 doesn't seem like much to get excited about. In comparison to what you could make elsewhere, the returns have remained pitiful.

What has been successful won't continue. With businesses like Shell, GSK, and Diageo obtaining the majority of their profits from the rest of the world, the FTSE 100 is a highly global index. But in essence, it remains linked to the British economy. Furthermore, the country's prospects for growth are bleak and constantly deteriorating. Almost no new jobs are being created, retail sales are stagnant, and foreign investment has collapsed.

Even worse is the fact that taxes will unavoidably increase due to the government's desperate need for additional funding, and businesses will once again be the ones who suffer the most. An extension of windfall taxes on banks and energy companies, higher business rates for large stores and warehouses, and even a "temporary" corporation tax surcharge based on the levy imposed in France last year are all possible outcomes. In any case, it will result in reduced earnings and dividends for shareholders, which will prevent the index from rising significantly.

The backwater FTSE 100 is drab.

Lastly, businesses continue to depart; a growing number of large corporations are opting to list their shares in New York rather than London. The pharmaceutical behemoth AstraZeneca, the biggest company listed on the FTSE, has even talked about moving across the Atlantic. Companies like Flutter and Wise have already left. At the same time, international corporations like the Chinese fast-fashion giant Shein are declining the chance to list on Wall Street, while rapidly growing new companies like the fintech star Starling Bank are looking to Wall Street rather than the City. The older, more established giants that have little room for growth must be replaced by a constant flow of faster-growing new businesses if an index is to grow at a respectable pace. Because the FTSE 100 can no longer draw in those kinds of companies, it will be extremely difficult to stay competitive, particularly in the US.

The FTSE is becoming a backwater, for the simple reason that investors would still be better off investing their money elsewhere.