RUTH SUNDERLAND: Buy shares and support Britain

Seventy years ago, the New York Stock Exchange (NYSE) embarked on a public relations campaign that revolutionized its fortunes and those of many small investors and companies.

The world was in the grip of the Cold War and the stain of the great crash of 1929 still hung over Wall Street.

A clever spin doctor came up with the slogan: ‘Own your share of American business’, which lasted for fourteen years.

The program portrayed stock investing as a patriotic act, combining self-interest in the form of personal gain with the broader national interest of supporting

American companies that create jobs and increase prosperity. As a small investor you had to do your part to promote the American dream and protect the free world from the communist threat.

Even today, the effects of that campaign are visible in the flourishing culture of individual stock ownership in the US. Despite the privatizations of the Thatcher era, such a culture does not exist here.

The trend is in the opposite direction, and that is alarming.

Recent years have been brutal for companies listed on the UK stock markets and especially for smaller companies, as a report from research group New Financial shows.

The number of small businesses – those with a market value of less than £1 billion – has fallen by almost a third, equivalent to the loss of 600 listed companies. This might not matter so much if there were a healthy flow of new listings, but the markets are not being replenished. Before the financial crisis, about 300 smaller companies flocked to the stock market every year. That has now dried to a trickle.

Private equity, on the other hand, is an increasingly important source of capital: the value of acquisitions of smaller companies has almost doubled in recent years. The problem with this is that private equity barons are short-term people, with a three- to five-year horizon.

If small businesses want to grow big, they need long-term capital. Why does it matter? Small listed companies are of great importance to the economy.

They have a combined turnover of £170 billion, employ more than a million people, are present in all regions and countries – and require long-term capital.

What can be done? One idea is to encourage, or even force, pension funds to invest more in UK shares in general and smaller companies in particular. Refraining from an attack on tax benefits for investors in the junior AIM market is another. Changing incentives so that some of the almost £300bn of tax-free cash ISAs are converted into shares ISAs could also help.

However, what we really need is a cultural change so that people accept the idea of ​​using their pensions and savings to support the UK economy.

This is what has happened in the US since the 1970s, when savers were forced to fund their own pensions, rather than relying on employers as their pension providers. We’re probably twenty to thirty years behind.

The Cold War has faded into the annals of memory, but with Putin in general and the Middle East in turmoil, the world is a dangerous place and our prosperity is not assured.

Time to take a leaf out of the NYSE’s book and bang the drum for owning a stake in the UK companies. We cannot have capitalism without healthy capital markets.