The London Stock Exchange is shrinking, and it’s not just a numbers game—it’s a symptom of a deeper economic malaise. Let’s be clear: the UK’s public markets are being hollowed out, and it’s happening right under our noses. Take the recent spate of takeover bids—Rotork, Gooch & Housego, Ramsdens—all snapped up by foreign buyers. On the surface, these deals look like wins for shareholders, but zoom out, and you see a troubling pattern. Since 2023, over £285 billion in market capitalization has exited the UK, while a mere £6 billion has entered via new listings. That’s not a market; it’s a fire sale.
What makes this particularly fascinating is the sheer imbalance. The UK market is undervalued by global standards, and boards are under immense pressure to sell. Meanwhile, the US dominates 70% of global stock market value, pulling liquidity away from London like a gravitational force. Personally, I think this isn’t just about numbers—it’s about confidence. When companies like ARM Holdings flee to New York for their IPOs, it sends a message: London isn’t the place to scale up anymore.
One thing that immediately stands out is the policy response—or lack thereof. Yes, there have been consultations, task forces, and tweaks to listing rules. But let’s be honest: these are band-aids on a bullet wound. The UK’s Mansion House accords, for instance, focused heavily on infrastructure and private assets, virtually ignoring public markets. In my opinion, this was a missed opportunity. A vibrant stock market isn’t just about trading stocks; it’s about channeling capital into growth, innovation, and job creation.
If you take a step back and think about it, the pension system holds the key. Andy Haldane, now at the British Chambers of Commerce, has a point when he calls for incentivizing pension funds to invest in UK companies. Before 1997, the UK’s dividend tax credit regime did just that—it created a ‘home bias’ that kept capital local. Today, UK pension funds are among the least domestically focused in the world. What this really suggests is that policymakers need to rethink their priorities. It’s not about protectionism; it’s about balance.
A detail that I find especially interesting is the role of scale-ups. The Treasury wants to boost these high-growth firms, but without a thriving stock market, where will they turn? Private equity? Foreign exchanges? Neither option serves the UK economy in the long run. What many people don’t realize is that a healthy stock market is a barometer of economic vitality. When it shrinks, it’s a sign that something fundamental is broken.
This raises a deeper question: does the next chancellor even care? Andy Burnham’s speeches are light on specifics, and Shabana Mahmood’s economic priorities remain a mystery. But here’s the thing—reviving the London market isn’t just about finance; it’s about national pride and economic sovereignty. If the UK wants to compete globally, it can’t afford to be a bargain bin for foreign buyers.
From my perspective, the solutions are clear but politically challenging. Charles Hall’s proposals—like increasing UK weightings in pension schemes and removing stamp duty on share trading—are a good start. But they require bold leadership. The current hollowing-out isn’t just unhealthy; it’s unsustainable. If policymakers don’t act, the London Stock Exchange risks becoming a relic of its former self.
In the end, this isn’t just about stocks and shares—it’s about the UK’s place in the global economy. Personally, I think the next chancellor has a choice: either double down on policies that favor private assets and foreign markets, or take a stand for public markets and domestic growth. The clock is ticking, and the world is watching.
