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The UK stock market faces a crisis as British companies increasingly choose to list in New York instead of the London Stock Exchange. This crisis is compounded by a decline in UK-listed companies, exacerbated by a lack of new listings and a significant decrease in UK-based investment funds investing in UK stocks. Listed companies are being plucked off the exchange and we are witnessing the privatisation of British enterprise.

Private UK investors are withdrawing from London-listed stocks at unprecedented levels, driven by the cost of living crisis, higher mortgage rates, and poor performance relative to US markets. This withdrawal, reaching the highest levels in over two decades, reflects a shift towards prioritising immediate financial needs over long-term investment goals. The reduction in retail investor ownership of UK equities further undermines market sentiment and contributes to the overall decline of the UK stock market. It is apparent that we have a national crisis on our hands.

The British stock market is currently unloved, undervalued, and unappreciated.

Despite efforts to stimulate market activity through reforms, proposals and interventions, the UK equity market continues to shrink. This trend poses a significant threat to the UK’s standing as a financial powerhouse. Urgent action is needed to address the underlying issues and bring investors back into the UK stock market. The latest proposal for a British ISA is welcomed, but it won’t push millions of retail investors into UK equities. The crisis is cultural and derived from the City’s inability to sell the stock market to the British people.

Wall Street, European, and cryptocurrency markets are not experiencing the same crisis as the UK stock market. They are effectively engaging and enticing UK retail investors.

The decline of the UK equity market is not just a financial issue but also a political and social issue. As de-equitisation accelerates, there’s a risk of creating an economy where future generations are deprived of the opportunity to have a stake in the system through equity ownership. Traditionally, equity ownership has been a means for people to participate in the economy’s success, fostering a sense of ownership and national responsibility. The avenues for ordinary citizens to invest in and benefit from the growth of British businesses have become limited. This trend not only undermines the principles of a democratic economy but also exacerbates existing wealth disparities, as ownership becomes concentrated in the hands of a select few.

De-equitisation is depriving our children of the ability to have a stake in the system. This will have a profound political effect.

The crisis extends beyond economic and social realms; it is also deeply ideological. The decline in the stock market is not merely a symptom but a contributing factor to the erosion of British capitalism and the free market. Historically, vibrant stock markets have been the bedrock of capitalist economies, providing a platform for entrepreneurship, innovation, and wealth creation. However, as the UK stock market shrinks and companies opt for alternative forms of ownership or exit strategies, the foundational principles of capitalism and the free market are being undermined. This ideological shift threatens to stifle competition, innovation, and economic dynamism, leading to a less competitive and vibrant economy in the long run.

Patriotic investing will soon become a concept in Britain.

Depriving our children of the ability to own a stake in the system and contributing to the decline of capitalism will have profound political implications. As ownership in the economy becomes increasingly concentrated and opportunities for ordinary citizens to participate in wealth creation diminish, there is a growing positive feeling towards socialism. Millennials and Gen Z, in particular, are feeling the effects of unaffordable housing, with homeownership becoming an elusive dream. This has led to a significant demand for left-wing policies, with a majority advocating for socialism. The rise of figures like Jeremy Corbyn in 2017, and the growing support for socialist policies, indicate a shifting political landscape where the allure of socialism is gaining traction.
 Recent YouGov polls underscore the appetite for nationalisation among the British people. A large percentage of Britons support the nationalisation of key industries such as energy, water, trains, and buses, reflecting a desire for greater state control. If the younger generations continue to be denied the opportunity to own parts of their economy and private enterprise, then they will assert their economic interests at the ballot box. There will be calls for increased state intervention, wealth taxes, nationalisation and rent caps. The prospect of a resurgence of socialist ideals in the political landscape looms large, posing challenges to the Square mile, the traditional free-market model, and the principles of capitalism that have long defined British economic policy.

Over 80% of Britons support nationalising energy, rail, water and buses.

In summary, it’s crucial to recognise that the crisis unfolding in the UK stock market is not confined to financial realms alone; it represents a complicated challenge with profound political, social, and ideological implications. Beyond the numbers and market movements, this crisis strikes at the heart of British capitalism and the principles of the free market economy. Moreover, it threatens to deprive future generations of the opportunity to participate in and benefit from the system they consume. As homeownership becomes increasingly unattainable, the disillusionment with ownership will grow, paving the way for a surge in support for socialist ideologies. Against this backdrop, it’s essential for the City to acknowledge the broader ramifications of the stock market’s decline and to take decisive action. Without prompt intervention, we risk not only stifling economic growth but also fuelling the political populism that is currently gaining momentum. Therefore, urgent measures are needed to not only address the immediate financial challenges but also to safeguard the long-term viability of British capitalism and ensure that our children have a stake in the economic system.

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