Ed Balls, former economic secretary to the UK Treasury & shadow chancellor, has called for the UK to adopt a risk-positive culture in order to stem the reduction of capital raising in the UK equity market via the London Stock Exchange (LSE).
Speaking at the FIX EMEA event in London, Balls said, “The UK Government has to see our markets and trading places as national assets and work with the private companies who have stewardship over them. I think the fact that the London Stock Exchange Group (LSEG) business is doing really well as a global business, almost entirely as a data business, is a good thing. I think the London Stock Exchange really matters too, and it is important to the government’s relationship with the stock exchange is that they that talk about the importance of that trading platform here in London.”
He noted that a regulatory framework for capital listing was key to supporting firms and economic growth, and these rules needed to be examined as well.
“If there are issues about the rules and regulations, that make markets operate less well, which explain why there was less listing, and capital raising happening amongst SMEs in London compared to other markets, we should talk about those,” he said. “That was the subject of the Hill Report report quite recently.”
However, he also warned that the future UK governments – and the culture in the City of London – needed to be supportive of that process in order to ensure the country could attract new business into the primary market.
“It seems to me there has been a retreat in risk appetite in the UK across both parties. I think whoever is the government since the financial crisis and that is potentially quite damaging,” Balls said. “I don’t think you could expect the London Stock Exchange to solve that. That is a national mission.”
Recent rolling back of status for non-domiciled UK residents by the Conservative Party and the Labour Party policy on Bank bonus pay created a different dynamic for people working in the UK markets.
“People should pay their fair share in taxes,” he said. “But we need to be open to international business. People have to say this is the kind of place I want to come to work in if I am looking to take risk and deliver reward. The problem at the moment small companies conclude there are too many other places to go in order to do that.”
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