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The steady outflow of companies from the London Stock Exchange has reached a “pivotal moment” for the UK’s financial services sector, prompting urgent calls for action from the Confederation of British Industry (CBI).
According to the CBI, more than 213 companies have exited the London Stock Exchange since 2016, driven by a combination of factors including foreign listings, private equity buyouts, and reduced investor appetite for UK equities.
In a sharp warning to policymakers, CBI Chair Rupert Soames stressed the need for lighter regulation, improved market promotion, and stronger investment incentives to reverse the decline.
Reforms to Tax and Savings Incentives on the Table
One proposed measure under consideration is a reduction in tax allowances for cash ISAs—a policy reportedly under review by Chancellor Rachel Reeves. In her upcoming Mansion House speech, Reeves is expected to outline plans to encourage greater investment in equities by potentially limiting the tax advantages of cash ISAs, which currently allow up to £20,000 of tax-free savings annually.
Soames voiced support for this direction, arguing that the UK’s substantial cash savings—estimated at £300 billion—should be redirected towards more productive investments.
“Of all the investments God ever invented, cash ISAs are the worst,” he remarked.
“Safe from what? Inflation? I don’t think so.”
He emphasized that if taxpayers are to benefit from tax shelters, those funds should support economic growth through investments in productive assets rather than remaining idle in cash.
Corporate Departures Signal Deeper Concerns
The CBI highlighted high-profile corporate exits as a troubling trend that risks undermining the UK’s standing as a global financial hub. Key examples include:
- ARM Holdings — once the crown jewel of UK tech, now listed in New York.
- Paddy Power’s parent company Flutter — shifting focus to the US.
- BHP — the mining giant now listed in Australia.
- Consumer names such as Just Eat and Deliveroo have either moved or been acquired.
With 88 companies delisting last year and 70 more departing so far in 2025, concerns are mounting that London’s markets are losing relevance to foreign rivals.
Mr. Soames described the situation bluntly:
“Houston, we have a problem.”
Why It Matters: Economic and Tax Implications
Beyond market sentiment, the exodus poses a significant risk to the UK’s tax base. The financial services industry currently contributes roughly 10% of the UK’s total tax revenues, funding vital public services such as healthcare and education.
Soames warned that continued erosion of London’s capital markets would weaken this foundation, with long-term economic consequences.
Debate Over Executive Pay and Private Equity Buyouts
The CBI also addressed the role of private equity in reshaping UK markets. Private buyers often outbid public investors, offering higher executive compensation and operating with fewer regulatory constraints.
Soames called for a more pragmatic approach, particularly regarding executive pay:
“If you want world-class companies to stay here, you have to accept that management will expect to be paid accordingly—and we should not be squeamish about it.”
Government Response: Further Reforms Planned
The government has already begun addressing some of these challenges. Recent reforms to listing rules under the previous Conservative administration have loosened regulatory requirements. In addition, Chancellor Reeves is advancing plans to consolidate public pension funds into larger “superfunds” to drive greater domestic investment.
Several major pension and insurance firms have also pledged to allocate more capital toward UK-based private investments. However, current figures show that just 4% of UK investment assets are placed in British publicly-listed companies—underscoring the scale of the challenge.
A Treasury spokesperson confirmed that further measures are imminent:
“Next week, the Chancellor will set out how the government intends to ruthlessly exploit our global advantages, including continued reforms to maintain competitive, modern capital markets.”
While London remains Europe’s top equity capital-raising hub—securing three times more funding than the next three European exchanges combined—officials acknowledge that more must be done to attract leading global companies.
Key Takeaway for Policymakers and Investors
The CBI’s warning serves as a timely reminder: Without strategic reforms to tax policy, savings incentives, and capital market regulations, the UK risks losing its competitive edge. With both government and industry aligned on the urgency, bold action is expected in the months ahead.
The steady outflow of companies from the London Stock Exchange has reached a “pivotal moment” for the UK’s financial services sector, prompting urgent calls for action from the Confederation of British Industry (CBI).
According to the CBI, more than 213 companies have exited the London Stock Exchange since 2016, driven by a combination of factors including foreign listings, private equity buyouts, and reduced investor appetite for UK equities.
In a sharp warning to policymakers, CBI Chair Rupert Soames stressed the need for lighter regulation, improved market promotion, and stronger investment incentives to reverse the decline.
Reforms to Tax and Savings Incentives on the Table
One proposed measure under consideration is a reduction in tax allowances for cash ISAs—a policy reportedly under review by Chancellor Rachel Reeves. In her upcoming Mansion House speech, Reeves is expected to outline plans to encourage greater investment in equities by potentially limiting the tax advantages of cash ISAs, which currently allow up to £20,000 of tax-free savings annually.
Soames voiced support for this direction, arguing that the UK’s substantial cash savings—estimated at £300 billion—should be redirected towards more productive investments.
“Of all the investments God ever invented, cash ISAs are the worst,” he remarked.
“Safe from what? Inflation? I don’t think so.”
He emphasized that if taxpayers are to benefit from tax shelters, those funds should support economic growth through investments in productive assets rather than remaining idle in cash.
Corporate Departures Signal Deeper Concerns
The CBI highlighted high-profile corporate exits as a troubling trend that risks undermining the UK’s standing as a global financial hub. Key examples include:
- ARM Holdings — once the crown jewel of UK tech, now listed in New York.
- Paddy Power’s parent company Flutter — shifting focus to the US.
- BHP — the mining giant now listed in Australia.
- Consumer names such as Just Eat and Deliveroo have either moved or been acquired.
With 88 companies delisting last year and 70 more departing so far in 2025, concerns are mounting that London’s markets are losing relevance to foreign rivals.
Mr. Soames described the situation bluntly:
“Houston, we have a problem.”
Why It Matters: Economic and Tax Implications
Beyond market sentiment, the exodus poses a significant risk to the UK’s tax base. The financial services industry currently contributes roughly 10% of the UK’s total tax revenues, funding vital public services such as healthcare and education.
Soames warned that continued erosion of London’s capital markets would weaken this foundation, with long-term economic consequences.
Debate Over Executive Pay and Private Equity Buyouts
The CBI also addressed the role of private equity in reshaping UK markets. Private buyers often outbid public investors, offering higher executive compensation and operating with fewer regulatory constraints.
Soames called for a more pragmatic approach, particularly regarding executive pay:
“If you want world-class companies to stay here, you have to accept that management will expect to be paid accordingly—and we should not be squeamish about it.”
Government Response: Further Reforms Planned
The government has already begun addressing some of these challenges. Recent reforms to listing rules under the previous Conservative administration have loosened regulatory requirements. In addition, Chancellor Reeves is advancing plans to consolidate public pension funds into larger “superfunds” to drive greater domestic investment.
Several major pension and insurance firms have also pledged to allocate more capital toward UK-based private investments. However, current figures show that just 4% of UK investment assets are placed in British publicly-listed companies—underscoring the scale of the challenge.
A Treasury spokesperson confirmed that further measures are imminent:
“Next week, the Chancellor will set out how the government intends to ruthlessly exploit our global advantages, including continued reforms to maintain competitive, modern capital markets.”
While London remains Europe’s top equity capital-raising hub—securing three times more funding than the next three European exchanges combined—officials acknowledge that more must be done to attract leading global companies.
Key Takeaway for Policymakers and Investors
The CBI’s warning serves as a timely reminder: Without strategic reforms to tax policy, savings incentives, and capital market regulations, the UK risks losing its competitive edge. With both government and industry aligned on the urgency, bold action is expected in the months ahead.
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