The FTSE 100 index of leading shares grew 7.6 per cent over the course of the year to finish at 7,687.8.
Stock markets around the world also rose over the course of the year, with the US leading the way.
The Dow Jones Industrial Average finished 2017 25 per cent higher at 24,719, while the technology-focussed Nasdaq ended the year 28 per cent higher at 6903.4.
The FTSE climbing to record levels is good for the savings and pensions of millions of Britons, but it does not reflect what is happening in the UK economy.
Most FTSE companies in the FTSE earn the bulk of their profits overseas and have benefited from both the collapse in the value of sterling, which means that the profits they repatriate are higher, and the global economy enjoying a decade of surging growth.
The economic reality is that the UK’s GDP growth is the slowest among the major advanced, industrialised nations, productivity is weak and the squeeze on household incomes from stagnant wages and rising inflation is ongoing.
To fix this, the Government needs to do more to encourage companies, domestic and overseas, to invest in the UK, as well as improve the education system to make British workers more attractive to employers.
Until that happens, the UK will continue to lag behind others, irrespective of what the stock market does.