Operation 'Save the City' is only half complete

CSG NV

17/08/2026 13:09

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Neil Unmack
LONDON, Aug 17 (Reuters Breakingviews) - The decline of London’s equity market seems unrelenting. UK-listed companies are disappearing at an alarming rate, either because private equity firms are buying them or because CEOs are switching to a New York trading venue instead. All the while, fewer new ones are floating in the City of London. Market reforms may help to ease the decline. But a lasting recovery will also need better use of the county’s £9 trillion in savings.
So-called de-equitisation is a global phenomenon, but the trend seems particularly stark in the United Kingdom. The relentless pace of buyouts has continued this year, with names like £9 billion Intertek ITRK.L succumbing to private equity. European initial public offerings, meanwhile, have been slow amid volatile markets, and very few of the big companies that do list choose London. The two largest European IPOs in 2025 and 2026, security specialist Verisure VSURE.ST and defence group CSG CSG.AS, happened in Sweden and Amsterdam respectively. On Dealogic’s numbers, London is not even in the top five European countries by deal value for IPOs so far this year, and has not been the number one exchange on that metric since 2021.
Bleak as it seems, the decline need not be inexorable. A wave of recent reforms should boost London’s appeal to future IPO candidates. One element of the political and regulatory campaign, call it Save the City, involves dispelling myths. A recent initiative by the Financial Conduct Authority helps to combat the popular idea that UK trading volumes are thin. The watchdog highlighted that the widely used figures miss the roughly two-thirds of trading activity that happens off the main exchange through so-called dark pools and other trading venues. The message is clear: floating in London means tapping a bigger capital pool than most assume.
In other cases, the reforms are more material - and controversial. Regulators have loosened investor protections. This has involved reducing IPO timetables to leave issuers less exposed to market moves, and stripping back the need for companies to consult shareholders on takeovers, alongside a greater tolerance for dual-class shares with extra voting rights for some.
Setting aside the risk of these reforms, the result is that the City now looks more competitive on paper. Some market participants even argue that London's rules are more flexible than Amsterdam's, thanks also to changes by exchange owner LSEG LSEG.L to the index rules. Companies with foreign-currency shares and newly-issued IPOs can be incorporated in the benchmark. And while London will never be the natural home for multi-trillion dollar technology stocks, it can offer a berth for medium-sized companies that struggle to gain attention in New York, worth say $2 billion or less. One banker reckons that the broader pipeline of future new issues is the best it has been since at least 2021, suggesting that all of these efforts will soon bear fruit.
The unfinished work, however, is the need to build a bigger, more sophisticated domestic investor base. In recent decades, British pensioners and stock punters have turned their back on UK equities. Foreigners now own nearly 60% of the market, using Office for National Statistics data, up from 40% 20 years ago. Pension funds hold just 4% of their assets in UK stocks, less than half the average of foreign peers, using figures from the think tank New Financial presented in 2025. Getting more British money into British stocks could further support valuations and new listings.
One simple lever is tax. The government spent £54 billion in the financial year ending in 2025 providing income and other tax relief on personal pensions, and a further £8 billion on individual savings incentives. Yet this subsidy carries no obligation to hold UK stocks. Such moves shouldn’t be anathema: both the U.S. and Australia, for example, favour domestic equity ownership through their tax codes in different ways.
Take Britain's Individual Savings Account (ISAs), which are vehicles for holding tax-free investments. In 2024, they had £360 billion of cash. If that idle capital were steered towards UK stocks instead, it would create a war-chest equivalent to more than double last year’s global IPO volumes, based on Dealogic’s numbers. Of course, not all of the cash sitting in ISAs is appropriate for equities, which carry higher risks as well as rewards. But as new Prime Minister Andy Burnham considers ways to boost growth, making some tweaks to the savings subsidies regime might make sense. The City would certainly be grateful.
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CONTEXT NEWS
The UK should use tax incentives to boost investment in UK companies, Andy Haldane, former chief economist at the Bank of England, said at a recent British Chambers of Commerce speech.
UK households have £9 trillion of gross financial assets including pensions, of which some $2 trillion sits in bank accounts, Haldane said at the speech.

(Editing by Liam Proud; Production by Streisand Neto)
((For previous columns by the author, Reuters customers can click on UNMACK/neil.unmack@thomsonreuters.com))