Trade association UK Finance is calling for British startups to return taxpayer-funding support and tax reliefs should they choose to list their companies on non-British stock markets.
In a policy paper published this week, UK Finance suggested a “two-way commitment” framework to encourage British companies to list their share domestically.
The policy tackles a mounting problem for the Square Mile of companies small and large snubbing the London Stock Exchange for more lucrative valuations across the Atlantic.
British tech giant Arm Holdings PLC (NASDAQ:ARM) encapsulated this problem with its blockbuster US-based IPO in 2023, but Arm was just one of many innovative UK companies snubbing the City.
According to UK Finance, a tit-for-tat funding policy could help stem this exodus.
UK Finance wrote: “While most UK firms that choose to participate in public markets choose to do so in the UK, there is no question that competition from overseas venues is increasing.
“For this reason, the government should also consider ways in which an expanded set of taxpayer-funded supports for early-stage growth companies involve a two-way commitment and would become repayable in part or full if a recipient ultimately chooses to list, or move valuable operations, outside the UK.
Where a UK company chooses to join public markets or locate is a choice for the company. However, there is a strong case for linking taxpayer supports to future commitments to using UK public markets and operating in the UK.”
While sounding fair at face value, some voices in UK business rebuffed the idea.
In comments posted in The Telegraph, James Wise, a partner at tech-focused investor Balderton Capital, said: “We should be looking to incentivise companies to stay, not punishing them for leaving.
“We’re not the Soviet Union.”
Dom Hallas of lobby group Startup Coalition said it was “not only a dumb idea, it’s a dangerous one”.
He added: “If our ‘much-vaunted’ financial services sector wants to understand why lots of innovative businesses don’t see their future as listing in the UK, they would be better off taking a look in the mirror.”