The Standard: The three quick wins that could help revive the City's flagging public markets

Read the full article in The Standard here.

This year, we mark 60 years since London’s boundaries were redrawn, a milestone that underscores our shared commitment to shaping the capital’s future.

London has long been the engine of the UK economy, with the City of London at its heart. As the world’s leading financial centre, UK financial and professional services generates £294 billion annually in economic output every single year, with the Square Mile contributing £97 billion of that. That’s over 2.4 million jobs across the country. That is a genuine success story.

London boasts a wealth of advantages over our international peers, including a world-class equity capital market. However, it is difficult to escape the coverage that it has been a tough old year for the UK public markets.

Of course, de-equitisation is not a phenomenon unique to the United Kingdom. Jamie Dimon recently bemoaned shrinking public markets in the US. The equivalent decline in the UK is in fact not as great. Nevertheless, the mood could be better.

Urgent action is needed to unleash growth, and attract sustained investment in the City’s public markets. This matters because it will serve the interests of savers who need returns, businesses who need investment, and the country that needs growth.

My mayoral theme for the year, Growth Unleashed, makes the case for pragmatic reforms to unlock liquidity and create deeper UK capital markets without placing additional strain on the Exchequer.

We’re already seeing action. The Financial Conduct Authority (FCA) revised listing rules, and the Chancellor’s plans to amalgamate local authority pension schemes offer long-term benefits. But we need to go further and faster. Here are three ideas that could make a significant difference.

First, cash ISAs are an immediate source of capital. Of the roughly £700 billion invested in ISAs in the last ten years, £430 billion has gone into cash ISAs. Yet it is stocks and shares ISAs that would benefit UK businesses and the economy far more strongly.

Secondly, significant work has taken place over the past two years to support the UK pensions industry investing into pre-IPO and IPO firms. Venues such as AIM, where small and medium cap businesses should see inflows from the signatories of the Mansion House Compact, for example. But we need to encourage these flows to move faster.

Thirdly, stamp duty on shares puts UK markets and companies at a disadvantage compared to other countries. The UK currently taxes its retail investors with Stamp Duty Reserve Tax when buying a UK-listed Aston Martin share but not when buying a German-listed Porsche share or US-listed Tesla share. There could be other approaches to raising this taxation that does not weigh on the public markets, and encourages more companies and investors into the UK’s public markets.

This article appeared in full in The Standard on the 15th January 2025.