London's dominance as a global financial center is facing a significant challenge, with a record outflow of companies from the London Stock Exchange. Accountants EY report 88 companies, including major players like Flutter and Tui, have shifted their listings to US and European exchanges. This exodus marks the largest such outflow since the 2009 financial crisis.
The trend reflects a growing disparity in market size. While the UK's FTSE 100 companies, such as Tesco and HSBC, boast a combined value of £2 trillion, US tech giants like Apple command far greater market capitalization. Apple alone is worth over $3.72 trillion (£2.97 trillion), vastly surpassing any London-listed company. This dominance stems from the robust growth of the US tech sector, particularly its large tech companies.
This shift isn't solely about London's decline; it also highlights the US's ascendance. The UK's share of the global market has shrunk from 11% two decades ago to approximately 4% currently. A key factor is the need for significant tech companies to thrive in a stock exchange; the UK has struggled to attract and retain these firms in recent years.
The decision of firms like chip designer ARM to list in New York underscores this trend. Such departures have significant implications, potentially reducing London's attractiveness for attracting investment and impacting jobs and tax revenue.
Experts, like Professor David Bailey from the University of Birmingham, point out the potential consequences of this decline. London's financial services sector, including debt and metals markets, could be negatively affected if the city loses its appeal as a prime listing venue for major corporations.
While the UK government is likely concerned about the economic ramifications of this shift, London's recent reclaim of Europe's top stock market position, surpassing Paris, shows the city's resilience. This resurgence, however, does not diminish the larger picture: the sustained growth and dominance of the US tech sector continue to pose a substantial challenge to London's position as a global financial hub.
