London’s junior stock exchange should be scrapped as part of a radical overhaul needed to attract fast-growing firms and rejuvenate the UK’s capital markets, according to two influential think tanks. The Tony Blair Institute and the centre-right think-tank Onward have released a report stating that the UK’s capital markets are “not fit for purpose” and require “radical surgery”. London, once the world’s largest stock exchange, now ranks sixth and has struggled to secure major new listings from tech companies. Companies such as CRH, Flutter, and Arm have shifted their primary listings to the US in order to increase their valuations. The report highlights that London’s market is heavily reliant on legacy firms in energy and finance sectors, lacking the growth potential of technology businesses. It suggests merging Aim with LSE’s main market while creating a special route for high-growth firms in emerging technology sectors. The report also recommends maintaining tax breaks for investors in junior market stocks who seek high growth opportunities. Last year alone, 76 companies delisted from London’s Aim market due to low liquidity, diminished investor confidence, and limited available capital. Zachary Spiro from Onward stated that although the UK’s ability to finance growing tech companies is currently at risk, decline is not inevitable. Other recommendations include reducing red tape and establishing a £1bn Growth Capital fund to support science and tech firms by creating five large-scale growth investors.
However, some argue for measures supporting the Aim market instead of scrapping it entirely. Barclays has proposed tax reliefs for investors in businesses that graduate from Aim to the main market. James Ashton from Quoted Companies Alliance emphasized that Aim provides an essential alternative for growth companies not yet ready for the main market; its loss would narrow funding options in the UK while promoting a one-size-fits-all approach that penalizes small entrepreneurial stocks.
Benedict Macon-Cooney from The Tony Blair Institute believes bold reform is necessary if Britain wants to reclaim its financial powerhouse status by attracting top talent and building superstar companies.
Think tanks propose axing London AIM market due to tech float failures
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