The economy has flatlined in the first half of 2023 as a result of the impact of high inflation and rising interest rates, and a poor launchpad for growth from December's fall in GDP.
Company after company has decided that the London market does not have enough investors, taxes are too high, offices are too expensive, and the infrastructure too poor for it to be worth the bother of keeping their listing in the capital. They can do better elsewhere.
New York, New York
The chip maker ARM decided against listing its shares in London, despite plenty of arm twisting from the government. The building materials group CRH decided last month that New York was a better place for its equity to be traded, leaving the FTSE for good. The mining giant BHP has moved its listing from London to Sydney, while another materials group, Ferguson, switched from London to New York last year. And now hotel group IHG may make the same journey.
At these rates, no one will need the Prime Minister’s new plan to boost numeracy to count the number of companies still listed on the London market. The fingers of one hand will be more than enough to tot up the total. The direction of travel is a disaster. The London equity market is in a steep decline – and the government needs to take action, quickly.
Right now, only 6 per cent of UK pension fund money goes into shares quoted in this country.
Not too late!
House prices are predicted to have a sustained fall, with a peak-to-trough decline of 10% expected over the next two years. While the projected fall in prices will likely weigh on construction activity, particularly housebuilding, as well as affecting the sales of household goods, the changing influence of the property market on consumer spending means it is unlikely this fall in values will have a major adverse impact on the economy.
It is madness to sit idly by and watch the London Stock Exchange dwindle into irrelevance. The LSE is too important for the City to allow that to happen, and the City is too important for the wider prosperity of the UK to be allowed to stagnate. Rishi Sunak and his Chancellor Jeremy Hunt need to move a lot faster. If they don’t act soon, the London market will be completely irrelevant – and it will be too late to do anything about it.
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