The London Stock Exchange is experiencing a dramatic exodus of companies, posing a “pivotal moment” for the UK’s financial services sector, the Confederation of British Industry (CBI) has warned. The CBI highlighted that 213 firms have departed since 2016 due to factors such as overseas listings, private takeovers, and declining investor interest in UK stocks.
Rupert Soames, Chair of the CBI, stressed the urgent need for lighter regulations, better marketing, and incentives for investors to reinvest in British firms to halt the accelerating outflow.
Soames also expressed support for cutting tax allowances on cash ISAs to encourage more investment in productive assets such as stocks and shares—a move reportedly under consideration by Chancellor Rachel Reeves. She is expected to unveil proposals that would reduce tax breaks on cash ISAs during her Mansion House speech, aiming to direct more savings into UK investments.
“Of all the investments that God ever invented, cash ISA is the worst possible one,” Soames stated. He added that the £20,000 tax-free allowance does little to stimulate growth and that there is roughly £300 billion held in cash ISAs, which could be redirected to boost the economy.
Alarm Over Company Departures from London Stock Exchange
Referring to the outflow of firms, Soames remarked, “Houston, we have a problem.” Major companies, including ARM Holdings, Just Eat, Deliveroo, Paddy Power’s parent company Flutter, and mining giant BHP, have either left the UK markets or shifted their listings abroad.
Concerns also loom over iconic firms such as Shell and AstraZeneca potentially leaving London. Last year alone, 88 firms exited UK markets, with 70 more departures recorded so far this year—turning what was once a slow trickle into a worrying flood.
Soames warned that these exits threaten a vital pillar of the UK’s economy. The financial services industry generates around 10% of all UK tax revenue, supporting key public services like healthcare and education.
Executive Pay and Private Equity: A ‘Grown-Up’ Conversation Needed
Soames also addressed the trend of public companies being acquired by private firms, which often leads to less regulation, higher executive pay, and larger buyouts.
He argued that if the UK wants to retain top global firms, it must accept competitive executive pay packages without hesitation. “If you want international companies here, you’ve got to allow them to pay management what they think they need,” he said.
Government Reforms Underway—but More Action Needed
The CBI acknowledged recent steps to strengthen UK markets, including loosened listing requirements by the previous government and plans from Reeves to consolidate pension funds into larger “superfunds.”
Several major pension and insurance companies have also pledged to increase investments in UK assets. However, UK investors still allocate only about 4% of their funds to British publicly listed companies.
A Treasury spokesperson told the BBC that the Chancellor would soon provide more details on plans to “ruthlessly exploit our global advantages,” with ongoing reforms aimed at keeping UK capital markets competitive.
Despite raising more equity capital than the next three European exchanges combined last year, experts say the UK must do more to attract and retain top firms. The challenge now, Soames noted, is not only leading investors to opportunities but convincing them to invest at home.
