The FTSE 250 has pushed through its 2021 peak to set fresh all-time highs in 2026, even as the FTSE 100 hovers near record levels of its own.
Despite both indices performing well on the surface, a closer look reveals two very different stories unfolding beneath the headline numbers.
On a forward price-to-earnings basis, the FTSE 100 trades at around 18.1 times earnings, while the FTSE 250 sits closer to 15.3 times, representing roughly a 15% discount for the mid-cap index.
Some market commentators go further, arguing that UK mid-cap stocks still trade well below their historical averages even after this year’s strong rally.
The valuation gap is not simply a signal to buy the cheaper index, but rather reflects a fundamental difference in what each index actually represents.
The FTSE 100 functions largely as a global portfolio listed in London, with approximately three-quarters of its revenue earned outside the UK, concentrated in financials, energy, and mining.
The FTSE 250, by contrast, is far more a direct bet on Britain, with constituents earning much more domestically and making the index more sensitive to UK interest rates, consumer spending, and housing.
The valuation gap therefore reflects genuinely different risk profiles, with the FTSE 100 commanding a premium as a defensive global cash generator, while the mid-cap index carries greater exposure to the UK economic cycle.
Greggs (LSE: GRG) is one stock that illustrates the discount particularly well, trading at 1,790p on 10 September with a P/E ratio of just 13.9, below both indices’ averages.
The bakery chain, which carries a market capitalisation of £1.8bn, has seen its shares rise 6.7% year to date after a challenging period for shareholders.
CEO Roisin Currie offered a measured but forward-looking assessment of the business, saying: “We made good progress in 2025, in a challenging year where subdued consumer confidence impacted the food-to-go market. We enter 2026 with a strong pipeline of new opportunities to make Greggs even more convenient for customers.”
Greggs also offers a dividend yield of 3.85%, adding further income appeal for investors considering domestically exposed consumer-facing businesses.
The FTSE 100, meanwhile, is forecast to deliver £88.8bn in dividends across 2026, underlining its continued attraction as a reliable income-generating index for investors with a global outlook.
For those seeking to express a view on a UK economic recovery, mid-cap stocks like Greggs represent a compelling, if not automatic, case for attention in the current market environment.
The FTSE 250 is not worth investing in simply because it trades 15% more cheaply on a P/E basis, but the discount does offer genuine opportunity for selective investors willing to back Britain’s recovery.