The judges’ scores are in: Wise’s decision to float in New York is surefire proof that London is in the doldrums. Empty rhetoric and ‘get Britain building’ aside, as a financial centre our capital is stooping deeper and deeper into uncompetitiveness.
Without a concerted, active effort from our Chancellor to fix our regulators, I’m afraid we could slip further behind on the global podium.
In March, Rachel Reeves called out our regulators for imposing ‘too much bureaucracy’. And I agree – for too long, our core financial regulators have deterred promising, homegrown companies from cementing their future in the UK. The decision by Arm, the Cambridge-based semiconductor company, to opt for the Nasdaq was the first shock to the system – and we should have realised it then.
Yet despite mandating bi-yearly reviews for our watchdogs, all our Government has done is lament and despair. Our listing criteria – which make the IPO process far too onerous – are extensive, and our regulators still require firms to undergo bulky admin processes before going public. It’s no wonder that our own startups see New York as their get-out.
Of course, the US does have its natural advantages: there’s a stronger culture of retail investment, deeper pools of venture capital and a greater appetite for risk. But global geopolitics is at a critical juncture – and as long as Donald Trump sticks around, there will be investors de-risking themselves from US volatility. We should be capturing this investment and using it as an incentive for firms to strike higher valuations.
But that’s not been the case, has it? Beyond the bureaucracy callout, we’ve only heard insipid speeches from Reeves promising to make the UK the best place in the world to grow, scale, list – or any other platitude from the Government’s vocab sheet. It’s been all talk, no walk.
I’m fed up with the words, and equally, I’m fed up with the endless campaigning. If Reeves really wants to supercharge the London IPO market, she has to take an axe to our watchdogs. Mel Stride recently stated that the ratio of regulators to those employed in financial services is 1:75, compared to 1:300 in 2011. To me, that’s case in point.
That said, it’s not just our ‘Big Brother’ watchdogs that businesses have to contend with. It might have been eight months ago now, but the Autumn Budget is still fresh in memory. The hikes in employer NICs and, for larger giants, minimum wage, are a near-death sentence for UK listing hopefuls. These are huge costs, and they’ll undoubtedly hamper any growth plans our innovators had leading into the new financial year.
In government, policy U-turns are vehicles for public shaming. You essentially admit you were wrong the first time around – and in the dog-eat-dog Westminster environment, this usually leads to accusations of being ‘unfit to govern’.
But as the winter fuel payments debacle has shown, sometimes, they’re necessary. Last October, Reeves stepped up to the despatch box with a bludgeon, and it’s time she attempted. If not, London’s woes will only persist – and so will Labour’s reputation of being anti-growth.
I’m a bit of a literature nerd, and I can’t help but view the Government’s position here like a theatrical anagnorisis. As with Macbeth or Oedipus, Reeves – and Starmer, of course – are at a critical point of realisation: that their current approach to policymaking is not helping the London market and, in fact, is not even scratching the surface of its issues.
And yet, unlike these typical tragic epiphanies, I don’t think it’s too late. London is one of the world’s major metropoles and financial centres – we have allure and clout, and as such, businesses from across the globe naturally consider their future in the Square Mile. Of course, that includes businesses grown and nurtured within our shores.
But we have to buck the trend of fast growers choosing New York over us. Our Government needs to take a brutal approach to cutting our regulators’ reach and influence and proactively reduce the costs of doing business in this country. At the moment, our ‘deregulation drive’ is all smoke and mirrors. Drastic action is needed.
London’s closed-for-business sign has been on our door for far too long. We’re losing businesses at a rate of knots, and flowery speeches won’t be enough to stop them from doing so in the future.
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