We must act now to restore the city to its former glory, says stock market advisor DAVID BUICK of Aquis
Rishi Sunak and Jeremy Hunt quickly took on the task of restoring fiscal competence after Liz Truss and Kwasi Kwarteng’s disastrous mini budget.
But now is the time to start the recovery process with a high degree of urgency. Investment in the UK is insufficient.
The March budget included a modest stimulus to business, but it was well below the required level.
Businesses were appalled by the unnecessary increase in corporate tax from 19 percent to 25 percent, which sent the wrong signal to investors worldwide.
We know that Arm has been lost to the Nasdaq, and that Flutter and CRH are likely to follow. The regulatory authorities, at the behest of the government, seem eager to relax the criteria for public listing.
Lack of investment: March budget included modest stimulus for business, but was well below required level
However, considerable frustration has been expressed at the lengthy time it takes to implement the relaxation of regulatory requirements.
Sir James Dyson recently accused the government of ‘outrageous neglect’ of the science and technology sectors.
This followed a similar criticism from Jan du Plessis, former chairman of BT, coupled with another from Julia Hoggett, CEO of the London Stock Exchange.
They have made scathing comments that the ‘scary British way of life’ is holding back the city’s competitive advantage. It is definitely high time for the government to respond positively to this level of inertia.
Despite the strong current of negative commentary, the city’s stock exchanges – the LSE, AIM and the Aquis Stock Exchange – are well positioned to bring ambitious and innovative companies to the altar of public listing as economic and improving investment conditions.
They will happily host IPOs and help revive the city’s financial services prowess.
Aquis, a challenger focused on innovating the listing of growth companies, believes there is no shortage of companies looking to raise their profile and raise growth capital as part of a public listing. Aquis has more than 40 companies in various stages of exploring an IPO.
The UK is clearly a hub for growth companies in the new economy. Aquis has been particularly successful in attracting these in recent times.
More established sectors are also in the pipeline, including retailers, professional services firms and accounting firms.
And there are opportunities for double listings from abroad – so perhaps the outside world isn’t as negative about using London as a financial base as it has seemed to be in recent months.
Unfortunately, today’s commentary seems to focus on why public markets are unattractive, rather than trying to highlight the positives of a stock exchange listing.
There needs to be a willingness to be more open to corporate rules to make them more accessible and improve the way companies – especially small and micro caps – are traded.
Equipmake plc, a company incorporated in Norfolk and listed on the Aquis stock exchange, is a classic example. It is a world-leading technology company specializing in converting diesel engines to electric motors.
It floated last year worth £35 million. Equipmake today has a market value of £85 million. It has made great progress and is in an excellent position should it need more capital in the future.
With better investment incentives, the ambitious and innovative companies can be developed, restoring the city to its former glory.
David Buik is an advisor to Aquis Exchange