The head of the London Stock Exchange (LSE) has urged the UK to implement structural incentives to encourage domestic investment and reverse the trend of companies listing their shares in the US. Dame Julia Hoggett told the BBC that if the UK wishes to support its own companies, it must make its stock market more appealing, otherwise, major firms will continue to seek opportunities for growth abroad.
Over the past few years, a significant number of large companies have either left the London market, are contemplating a move, or have been acquired by foreign private investors. This trend raises concerns about the weakening of the UK economy, potentially leading to reduced tax revenues and depressed business valuations.
"If we want Britain to back Britain, which is what I hear the chancellor and the prime minister saying, then let's make sure that we're creating structural incentives to do so," Dame Julia stated on the BBC's Big Boss podcast. "We need to take the handbrake off."
The LSE currently lists approximately 930 companies with a total market value of about £4.9 trillion, of which nearly 40% are international businesses. However, recent years have seen numerous firms delist or relocate, including Just Eat to Amsterdam, Tui to Frankfurt, and Paddy Power-owner Flutter to New York.
Concurrently, the number of new companies initiating public offerings (IPOs) in London has declined sharply. Last year, London saw 23 IPOs raising £2.1 billion, a stark contrast to the US markets, which hosted 354 IPOs and raised $44 billion (£33 billion).
This shift has coincided with a notable increase in British investment flowing into US stocks in pursuit of better returns. Dame Julia observed, "We talk as a nation about wanting growth in every postcode, but at the moment, a lot of us are funding growth in every zip code."
She emphasized that there is no scarcity of strong companies or capital but suggested that negative sentiment surrounding the UK market, often exaggerated, has historically contributed to companies' decisions to leave. "We need to stop throwing shade at ourselves as a nation... it's a national habit," she remarked.
To address this, Dame Julia advocates for more incentives for British individuals to invest in UK stocks. Specifically, she proposed the abolition of the 0.5% tax levied on the purchase of UK shares, highlighting that no such tax exists for foreign stock purchases. She also expressed support for tax credits for domestic investment, a scheme the UK had until 2016.
The Confederation of British Industry, a business lobbying group, has similarly called for urgent measures to halt the outflow of firms from the LSE, suggesting that lighter regulation, enhanced marketing, and investor incentives are crucial. A government spokesperson stated that decisions regarding tax are for the chancellor to announce at fiscal events and declined to comment on speculation or proposals.