The UK needs to do more back its own companies at a time when a growing number are choosing to list their shares in the US rather than at home, the boss of the London Stock Exchange (LSE) has told the BBC.
Dame Julia Hoggett said the government needed to make it “more attractive” to invest in the UK stock market, otherwise big firms would continue to look overseas for their next stage of growth.
Over the last few years, scores of big firms have left the London market, are considering a move or have been bought by private foreign investors.
The fear is this weakens the UK economy by reducing tax revenues and depressing 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 told the BBC’s Big Boss podcast.
“We need to take the handbrake off.”
The LSE’s main market is made up of around 930 companies with a total market value of about £4.9 trillion.
Almost 40% are international businesses, hailing from over 80 countries.
But in the last few years, many firms have delisted or moved away from the LSE, including takeaway chain Just Eat, which joined the Amsterdam stock exchange, travel giant Tui which opted for Frankfurt, and Paddy Power-owner Flutter which now trades in New York.
‘Stop throwing shade’
Meanwhile, the number of companies newly listing their shares in London has dwindled.
Last year, there were 23 initial public offerings (IPOs) on the London market, with £2.1bn raised. In the US, which has much larger capital markets, there were 354 with $44bn (£33bn) raised.
It has coincided in a big rise of UK investment money flowing into US stocks in search of better returns.
“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,” Dame Julia said.
There was “no shortage of great companies and no shortage of capital”, she added.
But negative sentiment about the UK market – which was often exaggerated – had contributed to companies leaving in the past, she said.
“We need to stop throwing shade at ourselves as a nation… it’s a national habit.”
However, she said British people needed more “incentives” to invest in UK stocks.
She wants the government to scrap the 0.5% tax Britons pay when they purchase UK shares, pointing out there is no tax when they buy foreign stocks.
She also supports the idea of tax credits for Britons investing domestically. The UK had such a scheme until 2016.
Business lobbying group the Confederation of British Industry has called for urgent action to halt the exodus of firms from the London Stock Exchange.
It said that lighter regulation, better marketing and incentives for investors were needed to stem the outflow.
The government declined to say if stock market reform would be part of its Budget this month.
“As has always been the case, decisions on tax are a matter for the chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals,” a spokesman said.
