According to a report by UK Finance, companies that choose to list outside the UK or relocate significant operations away from the country should be required to repay taxpayer-funded support previously received.
In recent years, the number of companies opting to list on UK public markets has notably decreased, with a 23% decline in firms trading on the London Stock Exchange (LSE) over the past eight years, contrasting with substantial growth seen on the Nasdaq and Euronext.
In 2023, the Cambridge-based chip company Arm decided to list in New York, and Klarna, a buy-now-pay-later (BNPL) fintech, is now leaning towards a US listing after initially considering a launch in London. Additionally, several other UK-based fintechs, such as Ebury, Zopa, and Zilch, are exploring IPO opportunities.
A paper co-authored by the lobbying consultancy Global Counsel notes that “there is no question that competition from overseas venues is increasing” when it comes to attracting listings. The report advocates for the government to explore ways to implement a two-way commitment for taxpayer-funded support for early-stage growth companies, suggesting that this support should be repayable in part or full if a company ultimately chooses to list or relocate outside the UK.
The decision of where a UK company decides to go public or operate remains with the company. However, the paper argues for a strong connection between taxpayer support and the commitment to engaging with UK public markets.
Furthermore, the report supports the Financial Conduct Authority’s (FCA) proposal for a consolidated tape to provide investors with clear and cost-effective trading data. It also calls for a comprehensive cost/benefit analysis regarding a shift to T+1 settlement, considering the implications of similar changes in the US market.