London’s stock exchange – not floating, but sinking (2024)

The London Stock Exchange (LSE) used to be the largest in the world, but that was more than 100 years ago now. Even so, throughout my lifetime it has been a major player, a go-to destination for some of the largest companies in the world and easily the largest stock exchange in Europe, a massive source of investment and revenue for companies old and new and a hive of activity.

With huge companies floating, merging, buying each other, fighting endless take-over bids and sometimes losing and dying, it was always in the news. But ask yourself this; when was the last time you heard about the LSE?

The answer is: not very much recently. The reason is obvious – it has failed.

While the City of London remains a key financial centre – probably still the second largest in the world – the capital is no longer a major stock market centre. Share dealing is collapsing, companies are choosing to float elsewhere and the list of companies leaving London is frightening. The LSE is now, depending on how you calculate the figures, somewhere between the seventh and 11th largest in the world.

Some commentators put the decline down to more stringent rules and regulations, some blame the increasing reluctance of UK pension funds to invest in shares. But the most obvious reason is that Britain is just not a major economic player anymore.

If you want and need to raise billions, if you want a wide and deep market in which to trade, if you want to be able to attract almost unlimited numbers of investors who will take a risk on new technology, new ideas and new management, then don’t go to London.

New York is where the real action is. The pockets are deep and the enthusiasm for new industries is unlimited. It is where UK hi-tech success stories go to float, because they cannot be persuaded to stay in London even if the government begs them to.

Established firms are leaving the LSE too and moving abroad. The LSE has even been overtaken by Euronext and Paris, which is really rubbing salt into the wounds.

All this matters very much. Soon the EU will come for the euro clearing business and derivatives trading – it may fail, but it will certainly try to undermine the City in those and any other areas it can. Before Brexit, the City was protected by its membership of the Single Market. Not any more.

Inevitably this decline will hinder attempts by the Square Mile to claim that it is still a world player, the obvious base for European operations and Europe’s financial centre.

Already in the second division, the LSE is now sinking. Once famous as a towering force, it is now little more than a quaint, regional has-been with a very dusty trophy cabinet. Brexit means the UK has decided to go it alone as a minnow in a world of sharks.

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