Equity capital key to strengthening financial services sector
Equity capital remains a critical driver for the growth and competitiveness of the UK’s financial services sector, according to a new report from the City of London Corporation. The “State of the Sector: Annual Review of UK Financial Services 2024” highlights that while the UK continues to be Europe’s leading financial services destination, the sector must undergo further reforms to maintain its world-class status.
The report reveals that in 2023, companies on the London Stock Exchange raised over £17bn, significantly outpacing other European financial hubs like Paris (£10bn) and Frankfurt (£8bn). However, on a global scale, the UK ranked fifth for raising equity capital, trailing behind major economies such as the US, China, and Japan.
The report notes that high interest rates in 2023 dampened investment levels across the UK, particularly in private equity and venture capital, and led to a decrease in IPOs. Despite this, the UK has seen strong long-term performance, with 192 companies listing on the London Stock Exchange between 2019 and 2024, raising more than £23.8bn. Additionally, UK companies returned to equity markets with 1,975 transactions raising over £122bn during the same period.
Chris Hayward, Policy Chairman at the City of London Corporation, pointed out that recent reforms have removed long-standing barriers in the UK markets, making London a hotspot for international business. He added that the upcoming Industrial Strategy offers a unique opportunity to further strengthen the UK economy by boosting the financial services sector and encouraging innovation.
The report also identifies key areas for future growth, including increasing investment in the ‘Scale Up’ stage of businesses, enhancing promotional efforts for UK financial services, and using international agreements to expand trade routes for innovative services. Furthermore, it stresses the importance of supporting green investments and fostering a higher risk appetite to achieve net zero goals.
The findings underline the need for ongoing reform and targeted action to ensure the UK remains a global leader in financial services and equity capital.
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