The Guardian view on the London Stock Exchange: its struggles are the symptoms of a broken growth model Editorial

“WThe President of the Union Bank in London said in 1903, which was recognized, which is the financial position of the world. The fastest rate Since 2010. While the recent Glencore decision of Glencore to keep its inclusion in London has made a temporary batch, it will not be divided into tide. Increasing companies Get rid of London And the move to Europe and the United States.

Rachel Reeves hopes to revive the exchange by paying the ownership of the shares, and encouraging people to become the managers of their governor. The British Industry Federation (CBI) to it Special proposalsIncluding tax exemptions and reward rules more flexible. Both these lines depend on canceling restrictions, and do not address the basic problem: the patient’s sick securities market in Britain is a cause and as a result of investing stubborn low businesses and a broken growth model.

In theory, the stock exchange gives companies access to capital, which invests them in their business, which makes it more productive and causes the economy to grow. Retirement and savings boxes who buy their shares from this growth (as workers do, whose wages are supposed to rise with high productivity). But the stock exchange does not provide enough access to the capital, and the companies listed on the list do not invest to enhance growth. British pension funds, which were one day of the main buyers of shares in the United Kingdom, have declined. Many have turned into Gilts, or went to the United States to take advantage of the technical boom. In 1997, retirement plans in the United Kingdom 53 % of their assets are allocated For shares in the United Kingdom; Today, this number is only 6 %.

British companies grew more slowly. At the same time, their shareholders have pushed strong profits, resulting in a toxic cycle of stagnant growth and decrease in prosperity. Instead of enhancing investment, wealth is re -distributed up. Burning profit payments have grown almost six times than real wages between 2000 and 2019, and British companies are now spending less on research and development than European equations. The return on profit is About twice height For UK’s shares as they are for American stocks. The British economy excels in Renierism – less than that in investment that enhances productivity.

Consequently, the companies listed in Britain are vulnerable to the acquisition of foreign and private stocks, while successful companies are heading abroad to raise funds. The value of the British semiconductor company reached 24 billion pounds when Japanese Softbank bought it in 2016. Despite the desperate pressure of politicians, ARM cannot be persuaded to study its shares in London when it was announced. Instead, the UK -based company is based in the United States on the Nasdaq Stock Exchange, and since then it has gained nearly 85 billion pounds in value, most of which accumulate for investors abroad.

CBI wants Ms. Reeves to persuade pension money to invest in British companies. The flow of retirement capital would help, but it will not fix a deviant economic model towards extracting wealth. Public investment should form a part of the solution. Government regional banks can provide funds to companies outside London. Mrs. Reeves must also make more effort to force the current companies to invest in productive activities. Tax on Share re -purchasing operations It will be a good starting point. Also, the assignment of employee managers will lead to the company’s boards. But such proposals require a sense of political imagination – something that the current government does not seem to possess.

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