Chancellor Rachel Reeves faces mounting pressure to implement decisive measures aimed at revitalising the UK stock market, following a period marked by company departures and subdued new listings that have called into question London’s standing as a premier global financial hub. The prospect of a stamp duty holiday for investors in newly listed firms is currently under consideration, signalling a potential policy shift designed to attract more initial public offerings (IPOs) to the London Stock Exchange (LSE). This move comes amid growing concerns that the UK is losing ground to financial centres such as New York, Mexico, and Singapore in initial fundraising activity.

There has been a notable exodus of companies from the UK to Wall Street, with high-profile firms like AstraZeneca choosing to list directly on the New York Stock Exchange. Such decisions have intensified fears that London might permanently lose its influence in the global equity markets. However, recent listings, including the US data centre group Fermi’s dual listing on both the LSE and Nasdaq, and the anticipated IPO of challenger bank Shawbrook, suggest there remains appetite and opportunity for growth within the domestic market. Beauty Tech’s planned flotation, expected to value the firm at around £300 million, further bolsters a tentative sense of optimism about London's market viability.

Industry experts are urging the Chancellor to act boldly beyond tentative tax breaks. While the Treasury is reportedly looking at exempting investors from stamp duty on shares purchased in new listings for a limited period of two to three years, many voices from the City argue this would be an insufficient measure. The 0.5% stamp duty on UK share purchases has long been criticised for dampening investor enthusiasm compared to foreign markets, particularly US stocks, where no equivalent tax applies. Dan Coatsworth, head of markets at trading platform AJ Bell, called the proposed holiday a positive step but noted that fully abolishing stamp duty on all UK shares would be even more impactful, though he acknowledged the Treasury’s likely hesitation due to revenue concerns.

Calls for abolition are not limited to individual investors or trading platforms; influential bodies such as the Investment Association—which represents firms managing £9.1 trillion in assets—have urged a complete removal of stamp duty to enhance the UK's competitiveness. Leading fintech companies including Revolut, Monzo, Atom Bank, and Zilch have also lobbied for incentives like stamp duty holidays or capital gains tax reductions to encourage fast-growing businesses to list domestically rather than seeking foreign exchanges. Their argument highlights the strategic necessity of maintaining London's status as a fintech and financial services innovation hub.

City leaders and market analysts underline that such fiscal incentives could widen access to equity markets for retail investors and broaden the pool of potential investors for British firms. Chris Beauchamp from IG highlighted that the survival of dual listings like Fermi’s sends a positive signal to policymakers that London’s market "is not yet doomed to irrelevance" if it receives adequate support. Likewise, Brendan Callan, CEO of trading platform Tradu, voiced that abolishing stamp duty on all share trading would be a "strong step in the right direction" to rejuvenate the UK equities market.

Despite these wide-ranging calls for reform, the Treasury emphasises a balanced approach, underscoring its commitment to making the UK attractive for businesses to start, scale, list, and remain. However, with significant public finances pressures, the government’s willingness to forgo stamp duty revenue remains uncertain. The upcoming budget, expected in late November, will be a critical moment to observe whether these ambitions for the UK stock market translate into substantive policy changes.

The debate over stamp duty reform is emblematic of broader concerns about London’s future as a global financial centre. Abolishing or substantially reforming the stamp duty regime could be a pivotal strategy to boost domestic capital markets, incentivise IPOs, and counter the international drift of UK companies and investors. If Chancellor Reeves seizes this opportunity, it could mark a crucial turning point in reinvigorating the City and positioning it more competitively on the world stage.

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Source: Noah Wire Services