Britain’s capital markets are in a crisis that requires urgent action to arrest or else they will continue to decline, a senior banker at top US bank Citi has warned.
Highlighting a report commissioned by Citi, fund manager abrdn and written by think tank New Financial, David Livingstone who heads the bank’s operations in Europe, the Middle East and Africa said domestic investors have “all but abandoned” backing UK businesses.
Increasingly, the UK is reliant on foreign money to fund both its businesses and infrastructure, he added.
In the report: UK Capital Markets: A New Sense of Urgency, New Financial argues that the UK pension system is in crisis because of “excessive fragmentation, low contributions, insufficient exposure to longer-term and higher-returning risk and growth assets and widely varying rates of participation”.
In capital markets, leaving investing to overseas institutions is increasing the likelihood of UK founded growth companies, their employees and supply chains migrating to access capital.
“This situation is costly for all of us who live and work in the UK.”
New Financial argus that many years of “well-intentioned regulatory reform” has dulled the City’s appetite for risk-taking.
It points out that the number of companies listed in the UK has “virtually halved over 25 years”.