A priority for the next chancellor: boost the London stock market
Three more UK-listed firms fell to overseas bidders in a single day, underscoring the lopsided flow of capital out of London's stock market since 2023.
Intelligence analysis by Llama
Nils Pratley argues that minor listing-rule reforms have failed to stem the tide of overseas takeovers. With £285bn of UK market cap exiting against just £6bn arriving via new listings, the next chancellor must use pension policy to revive the market.
Imagine a big toy store where lots of toys keep getting sold to buyers from other countries, but hardly any new toys show up on the shelves. That's what's happening in London — way more UK companies are being bought by foreign firms than are joining the market. To fix it, the government might need to encourage UK pension savings to invest more at home, so the toy store fills up again.
Analysis
A One-Day Haul Tells a Longer Story
Thursday delivered a clean illustration of the London market's structural problem: three UK-listed companies — Rotork, Gooch & Housego and Ramsdens — disappeared into overseas ownership in a single session. Rotork's £4.1bn sale to Swiss group ABB, Gooch & Housego's £346m acquisition by a US investment firm and Ramsdens' £230m US takeover generated handsome premiums of 73%, 41% and 49% for shareholders, and on their own terms those are tidy outcomes. Read together, however, they are another data point in what Pratley calls the tale of London's incredible shrinking stock market. Each deal is rational for the seller; the cumulative effect is not.
The Lopsided Scorecard Since 2023
A Peel Hunt report titled Selling the Family Silver quantifies the imbalance. Since the start of 2023, there have been 154 bids for UK companies with a market value above £100m, amounting to £165bn of stock market capitalisation. Add the £120bn that left via seven large companies relocating their primary listings — usually to the US — and the outflow reaches £285bn. On the other side, only 11 new listings of companies worth £100m-plus have arrived, totalling just £6bn. The arithmetic is damning. Listings-rule tweaks, founder-vote protections and warm political rhetoric have done nothing to change the direction of travel. Boards are under pressure to sell, the UK trades at a discount to international peers, and liquidity in the sub-£10bn bracket continues to migrate to New York, which now accounts for roughly 70% of global stock market value.
The Pension Lever the Next Chancellor Must Pull
Chancellor Rachel Reeves's Mansion House reforms leaned heavily toward private infrastructure and privately owned assets, while the public markets received only a cap on cash ISA allocations and a stamp-duty holiday for new listings. Pratley argues the approach was doubly odd, because the Treasury's own "scale-up" ambition can also be served by a vibrant public market. Charles Hall, Peel Hunt's head of research, has proposed a 20%-plus UK weighting in default defined contribution pension schemes, a minimum UK weighting for ISA tax breaks, capital tax reliefs for London listings and the removal of stamp duty on share trading. Andy Haldane, now president of the British Chambers of Commerce and reportedly influential with leadership contender Andy Burnham, made a similar case last month, pointing to the pre-1997 dividend tax credit regime that steered pension capital toward UK equities. The core argument is that the UK pension system is uniquely lacking in "home bias" compared with peers abroad. If a future chancellor wants to move the dial, the answer runs through pensions — but only if politicians first accept that the hollowing-out is genuinely a problem worth fixing.
Key points
- Three UK-listed companies — Rotork (£4.1bn), Gooch & Housego (£346m) and Ramsdens (£230m) — were acquired by overseas buyers on Thursday at premiums of 73%, 41% and 49%.
- Since the start of 2023, £285bn of UK market capitalisation has left via takeovers and relistings, against just £6bn arriving through new listings, according to Peel Hunt.
- Chancellor Rachel Reeves's Mansion House reforms focused on private infrastructure and left public markets with only a cash ISA cap and a stamp duty holiday for new listings.
- Peel Hunt's Charles Hall and Andy Haldane of the British Chambers of Commerce both argue pension reform is the most powerful lever to restore a UK home bias in equity investment.
- The article frames the issue as a priority for the next chancellor, with leadership contenders Andy Burnham and Shabana Mahmood yet to outline serious plans for the London market.
If a future chancellor embraces pension-side reforms — such as a mandated UK weighting in default funds or the abolition of stamp duty on share trading — London could begin to close the gap between outflows and new listings. Andy Haldane's advocacy and Burnham's openness to such ideas suggest the political conditions for action may be more favourable than at any point since 2023.
With US markets absorbing roughly 70% of global equity value and UK boards under persistent pressure to accept takeover premiums, the outflow could continue to dwarf new issuance. If the next chancellor follows the existing Mansion House template of prioritising private infrastructure over public markets, the £285bn-out, £6bn-in imbalance will only deepen.
