The Central London Alliance’s (CLA) event, London: Opportunities and Obstacles for Growth, featured a high-level panel on the future of London’s financial services that looked closely at Capital Markets and Financial Planning for the city. Panellists Akash Kapoor, Charles Hall, Christian May and James Quarmby delivered a measured but firm message on the essential reforms needed to secure the capital’s financial future.
The discussion began with, Charles Hall, Head of Research at Peel Hunt LLP, reminding the audience that UK citizens own capital markets and represent a significant national asset valued at over £1 trillion. Building on this point, Charles stated “Capital markets are an incredibly important part of the whole financial ecosystem, they provide permanent capital to companies up and down the UK, a large number of them in London but also all the way up in Scotland and Northern Ireland.”
While the pension crisis puts pressure on politicians for a fix, the discussion highlighted the key financial remedy of shifting investment and requiring specific policy adjustments to ensure sustained domestic growth. Since equities reliably outperform debt over any sustained period, directing greater capital flows into equity markets is essential. This strategy, as noted by Charles, provides a powerful reason as to why we should be supporting our capital markets, making the UK the preferred place for businesses to be started, grown and listed (IPO).
The Need to Retain UK Capital
The panel stressed that the vast wealth generated by London’s financial sector is not being sufficiently reinvested domestically. The core policy objective must be to ensure that more capital should be placed into the UK equity market supporting UK equities and generating returns to London and other cities within the UK. When domestic companies are acquired by foreign entities or capital is exported, the associated business activity, talent and tax revenues are often lost abroad. The panellists underscored the simple economic logic that these capital markets are incredibly valuable for London and must be treated as a key national asset.
Joining the discussion, Akash Kapoor, Managing Director for Union Bancaire Privée, offered his view, stating “We have wonderful companies like Monzo and Starling Bank and Sum Up who have all committed in some capacity that they are likely to list in London, which I think is great news for London.” He acknowledged a global shift in investment, noting that while London remains an attractive hub for firms like Monzo, it is now in direct competition with the US, China and the Middle East for capital-raising dominance. Akash Kappor added “There is an element of regulatory issues which have been a concern with cost of listing and raising capital in London.”
Barriers to Listing: Cost and Complexity
The panellists identified two primary factors influencing companies’ decisions not to list in London: regulation and costs. They noted that while a robust regulatory environment is necessary, excessive complexity adds friction, explaining that whilst lawyers might like regulation, businesses hate it and higher costs both diminish returns and disincentivise listings. The increasing appeal of centres like Singapore and Jersey, which offer shorter timescales, less bureaucracy and less cost, provide clear evidence that the UK should continue efforts to streamline its processes.
Those on the panel also pointed to the structure of corporate financing as a hurdle, noting that bank lenders and processes increase the costs of raising capital, which effectively pushes companies toward debt rather than equity financing. Despite these challenges, the panel acknowledged that the regulatory landscape is improving, stating that London is better than two years ago and regulators are now embracing change with open conversations about encouraging growth.
Targeted Tax Incentives for Domestic Growth
A significant portion of the discussion focused on mobilising domestic pension and retail capital. “Most of the money people put into their pension funds whether they know it or not goes and gets invested in US companies. It’s utterly extraordinary and we give £50 billion of tax benefits for people to invest overseas,” highlighted Charles Hall, Head of Research at Peel Hunt LLP. The panel called for policy changes to counter the prevailing trend where pensions funds must be encouraged and incentivised not to export our capital, most of which is going overseas. The challenge of retaining and attracting high-growth companies is directly linked to this capital drain.
To fix this and actively draw investment back, the panel then outlined clear fiscal levers. Specific tax changes proposed include the introduction of tax breaks to encourage UK investment, arguing that the existing Stamp Duty on buying shares is nonsensical and should be removed.
Beyond these immediate investment incentives, experts also called for a renovation of taxes, noting that companies are currently being pushed towards a debt route by existing policies. “Let us not forget the importance of private equity. It’s the biggest private equity market in Europe, the government is doing its best to completely ruin that,” James Quarmby, Creator and Founding Partner of Stephenson Hardwood LLP, highlighted concerns over policies impacting key sources of investment. They argued that the removal of Business Property Tax Relief is unjustifiable and detrimental to the Treasury, and that Inheritance taxes were described as a major disincentive that discourage investment, growth, long term planning. Individuals need to be encouraged and incentivised to generate wealth, grow businesses, scale up their operations and build, not the opposite.
The panel concluded with a unified call to prioritise consistency and clarity, urging the industry to work together to consistently demonstrate to government “what’s really happening” on the ground to secure the future of London’s markets and the wider UK economy. For the long term, the proposed removal of Business Property Tax Relief and Inheritance Tax do the opposite – stunt growth, sell up and downscale.