Boost the London Stock Market: A Priority for the Next Chancellor 2026

The London stock market is facing a critical juncture, with a wave of takeover bids and a lack of new listings threatening its global standing. For the next chancellor, boosting the London stock market must be a top priority to reverse the trend of capital flight and restore investor confidence.

The Alarming Scale of Takeover Bids

Recent weeks have seen a flurry of acquisition activity for UK-listed companies. In a single day, three major deals were announced: Rotork, a Bath-based valve maker, agreed to a £4.1bn takeover by Swiss group ABB; Gooch & Housego, a precision optics firm, is being bought by a US investment firm for £346m; and Ramsdens, a financial services and pawnbroker company, is also heading to US ownership for £230m. While shareholders enjoy significant premiums—73%, 41%, and 49% respectively—the broader picture is concerning.

These deals are part of a larger pattern. According to a report by broker Peel Hunt titled "Selling the Family Silver", since the start of 2023, there have been 154 bids for UK companies with a market value exceeding £100m, totaling £165bn in stock market capitalisation. Additionally, £120bn has left via seven large companies moving their primary listings abroad, mostly to the US. In contrast, only 11 new listings of companies worth £100m-plus have occurred, representing a mere £6bn of capitalisation.

Comparing Inflows and Outflows

The imbalance is stark: £285bn out, just £6bn in. This trend threatens the UK's position as a global financial hub and requires urgent action.

Why Reforms Have Failed So Far

Politicians, regulators, and the London Stock Exchange have not ignored the issue. Numerous consultations, taskforces, and policy changes have been attempted. For example, the UK listing rules were revised to allow founders to retain outsized voting power, similar to US tech companies. However, these minor adjustments have failed to stem the tide. The next chancellor must adopt a more aggressive approach.

Key Challenges to Address

• Attracting high-growth companies to list in London instead of New York or other markets.
• Reducing regulatory burdens that make UK listings less attractive.
• Enhancing investor confidence through stable economic policies and tax incentives.
• Promoting domestic pension fund investment in UK equities to boost demand.

A Roadmap for the Next Chancellor

The next chancellor must prioritize comprehensive stock exchange reforms. This includes simplifying the listing process, offering tax breaks for companies that list in London, and encouraging institutional investors to allocate more capital to UK stocks. Additionally, a marketing campaign to promote London as a premier destination for IPOs could help reverse the narrative.

Without bold action, the London stock market risks becoming a shadow of its former self. The time for minor fiddles is over; the next chancellor needs a strategic overhaul to secure the UK's financial future.

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