A report by a City grandee has found that the 海角视频 needs to tap into domestic pension funds and overhaul its capital markets structure to attract the £1 trillion investment required to achieve its target growth rate over the next decade.
The Capital Markets of Tomorrow report, led by former Legal & General boss Sir Nigel Wilson as part of a government-backed initiative to rejuvenate the City, warned that the 海角视频 will need to draw in £100bn per year over the next decade to support a target three per cent growth rate, as reported by .
However, Wilson found that British markets have been hampered by a "risk-off" culture that has eroded investment from top institutions and the British public over the past two decades. He also noted that homegrown firms currently receive "limited investment" from large 海角视频 institutions.
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Wilson stated that retail share ownership among 海角视频 households has also plummeted by half over the past 20 years, and the average person needs to be enticed back into the stock market.
"There is a significant amount of "dry powder" that could be put to better use," his report found today.
The comprehensive analysis by Wilson and a group of City thinkers including Mark Austin, the capital markets lawyer, forms the latest of the Square Mile's efforts to reinvent itself and revive its IPO market following a decline in listings over the past two years.
The US markets have outpaced London, with more abundant capital reserves and a less onerous regulatory framework luring tech enterprises and rapidly growing companies from across the globe.
The London Stock Exchange has witnessed a downturn in new listings for the past couple of years. Notably, soaring inflation and interest rate hikes have battered the initial public offering (IPO) market worldwideLondon has been hit particularly hard.
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A mere 23 firms opted to list in London last year, marking a steep 49 per cent plummet from the 45 observed in 2022, culminating in the quietest year since the financial crisis.
Commenting on the situation, Wilson noted the unprecedented levels of money globally available and claimed that the 海角视频 must now court investment from individual and institutional investors to address this trend.
"Capital pools include domestic and international capital sources such as sovereign wealth funds, retail investment, private equity 'dry powder', and the 海角视频 is fortunate in that we have £6 trillion of long-term capital within our pension and insurance industries," Wilson stated. This suggests an ample supply of capital ready for deployment in growth opportunities.
Mark Austin, who contributed to the research findings, confided to City AM.
that the offered recommendations are part of a systematic "ongoing journey" aimed at rejuvenating the City and rendering Londons capital markets robust and "match fit" once more.
"When the markets do well, our economy does well. Already this year, more than £20bn of equity capital has been raised in London more than three times what was raised in the next three European exchanges combined to support businesses to invest, innovate and grow," stated City minister, Tulip Siddiq.
Boosting pension investment
The 海角视频's pension funds are significantly behind their international counterparts when it comes to domestic investment.
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This report is released as key figures from the City and government ministers convene at the London Stock Exchange today to discuss the state of the 海角视频's markets. The meeting is led by the Capital Markets Industry Taskforce, which is chaired by Julia Hoggett, the CEO of the London Stock Exchange.
A key topic of discussion at London's stock exchange will be strategies to encourage the 海角视频's domestic pension funds to invest in listed equities and foster a culture of risk-taking.
However, a report from a think tank associated with the group has highlighted the magnitude of the challenge today.
New Financial discovered that on "virtually every metric", 海角视频 pensions rank towards the bottom in terms of their allocation to domestic equities compared with 12 other developed pension systems, both on an absolute and relative level.
The percentage of assets that 海角视频 pension funds allocate to 海角视频 equities has dropped to 4.4 per cent, down from 6.1 per cent last year and a significant decrease from over half of their assets 25 years ago.