The UK stock market is facing a "scandal" of its own making, according to Shadow Business Secretary Andrew Griffith MP. The Financial Conduct Authority (FCA) and other regulators are being accused of creating an environment that is hostile to growth, with the London Stock Exchange struggling under the weight of takeover bids.
Mr Griffith points to stark statistics: in the first half of this year alone, the value of proposed takeovers was £100bn, a staggering 27 times higher than new companies entering the market. Peel Hunt data reveals that no fewer than 28 UK company takeover bids are currently on the table, with notable targets including Intertek, Beazley and Tate & Lyle.
At issue is the continued application of stamp duty on share purchases, which imposes a 0.5% tax on investors buying shares in UK-quoted companies. Despite Chancellor Rachel Reeves' introduction of a three-year stamp duty holiday for newly listed shares in the 2025 Autumn Budget, Mr Griffith believes this measure has done little to attract investors.
A key point of contention is that, by taxing share trading, the government appears to be sending a contradictory message: if we tax something, we typically want less of it. Yet competitor markets do not levy similar charges. This disparity raises questions about the UK's competitiveness and its ability to attract investment.
Mr Griffith also urged the UK to "fall back in love with risk", echoing calls from industry figures who have criticised a perceived cautious approach among both investors and regulators. He argued that over-regulation is stifling growth, citing "left-leaning" rules such as capping executive pay and stringent ESG targets as examples of "epic self harm". This over-regulated landscape, he claimed, is a factor in companies choosing to list overseas, particularly in New York, where greater flexibility is offered to businesses and investors.
Furthermore, Mr Griffith critiqued the current structure of pension investments, noting that many British workers lack direct control over how their pension funds are allocated. He pointed out that large institutions managing workplace schemes have reduced their holdings in UK shares over the past two decades. While acknowledging Labour's strategies to channel UK pension capital into the domestic economy, such as the Mansion House Accord, Mr Griffith rejected these approaches, advocating for greater individual autonomy in investment decisions rather than "more complicated tax rules and regulations".