The London Stock Market: A Priority for the Next Chancellor?
The London Stock Market is facing a critical juncture, with a priority for the next chancellor to address the issue of boosting the market. The market is currently underperforming, with a lopsided nature of takeover bids and new listings. The UK market is wide open to bidders, and it is underpriced via international yardsticks. Boards are under pressure to sell, and liquidity gravitates towards New York, at least for firms in the sub-£10bn bracket.
The current situation is not healthy, and it requires a shift in incentives and tax reliefs to channel more capital into UK firms. The answer inevitably involves the pension system in some way. In a stock market context, it requires the politicians to see there’s something worth boosting.
The next chancellor should focus on the following measures to boost the London Stock Market:
- A 20%-plus UK weighting in default defined contribution pension schemes
- A minimum UK weighting for Isa tax breaks
- Capital tax reliefs for entrepreneurs listing in London
- Removing stamp duty on share trading altogether
- A shift in incentives and tax reliefs to channel more capital into UK firms
The current hollowing-out of the London Stock Market is a critical issue that requires urgent attention from the next chancellor. The market is a critical way in which capital reaches wealth-creating assets, and it is essential to boost those capital flows. The current approach of the Treasury is heavily skewed towards infrastructure and privately owned assets, and the public markets barely get a look-in.
In my opinion, the next chancellor should prioritize the London Stock Market and focus on the measures outlined above to boost the market and attract more capital into UK firms.
