As Chancellor Rachel Reeves prepares to deliver her Mansion House Speech on Tuesday evening, the UK’s stock market finds itself at a critical crossroads.
A report by the Confederation of British Industry (CBI) published just days ahead of the address, highlights a steady decline in public markets that many experts say demands urgent government action.
The report outlines worrying trends: fewer companies listed on the London Stock Exchange, shrinking liquidity, and fading investor interest, particularly in small and mid-cap stocks.
This ongoing contraction risks undermining London’s status as a global financial hub and threatens to cut off vital capital for British businesses aiming to grow and innovate.
Once Europe’s largest equity market and second only to the US worldwide, the UK has seen a sharp drop in initial public offerings (IPOs), with more firms choosing to go private or list overseas.
Analysts note that just 36% of the UK’s 500 biggest companies are publicly traded today. Meanwhile, institutional investors such as pension funds have slashed their exposure to UK equities from nearly 46% in 1997 to just over 4% in 2022.
Against this backdrop, calls are growing for comprehensive reforms to restore confidence and attract investment back into domestic markets.
Proposals it is hoped will feature in the Chancellor’s speech include revisiting stamp duty and pension rules, expanding Individual Savings Accounts (ISAs) to boost retail investment, and launching a UK-focused investment fund to support the growth of private companies and strengthen the IPO pipeline.
Industry insiders see the British Business Bank as a natural body to manage such initiatives.
The coming speech is widely viewed as a test of whether the government is ready to take bold steps to reverse these trends.
Experts stress that directing capital towards small and mid-sized firms is essential, not just to revive public markets but to maintain the UK’s edge in innovation and economic competitiveness.
Without decisive action, analysts warn that London risks losing more high-potential businesses to foreign markets, shrinking the pool of growth stocks available to investors at a time when the country needs a vibrant capital market more than ever.
The Mansion House speech offers a crucial moment for the government to set a clear path for the future of Britain’s financial ecosystem.