It has impeccable green credentials. It is crucial to the country’s power grid. And it is one of the UK’s largest private companies. A floatation of Octopus Energy should have been just the kind of event that would give the London Stock Exchange a much needed boost. And yet it now emerges that it may well choose a rival market to list its shares. If that happens, it will accelerate the City’s decline into global irrelevance – and an incoming Labour government may well finish it off.
It is probably the worst news the London market could have had. The chief executive of the giant Octopus Energy, the largest electricity supplier in the UK, revealed today that the company might list elsewhere. ‘If we ever were to IPO, it’s not obvious it will be London’, the company’s founder and chief executive Greg Porter told the financial newsletter Semafor. It might choose New York, or somewhere else entirely.
If that happens, it will confirm the dramatic decline of the City. True, the Cambridge-based computer company Raspberry Pi may have listed its share in London today. But that is a rarity. The giant microchip designer Arm chose New York instead, while companies such as CRH and Flutter have switched their listing to the other side of the Atlantic. Even giants such as Shell have flirted with the idea of moving. The number of companies quoted in London has fallen from 2,700 businesses in 1996, to just 1,100 at the end of 2022, a fall of 60 per cent. Very few new companies list any more, and every year a few move elsewhere, and more are taken over. At the current rate there will just be a handful left by the 2040s.
A Labour government is only going to accelerate that. Sure, the party may talk about ‘growth’, but all its actual policies are designed to prevent it. The London market suffers from excessive regulation, with so many environmental, social and governance targets that companies can’t be bothered with the hassle of listing any more. But Labour is determined to increase those, and certainly won’t reduce any of them. It is planning to corral pension funds into putting money into ‘green infrastructure’, even though it means less is available for the equity market. And it is planning a series of extra windfall taxes that will amount to little more than a shake-down of any sector that happens to make a profit.
Perhaps worst of all, it is becoming increasingly clear it plans a dramatic rise in Capital Gains Tax, a move that would make investment in equities far less attractive then it is now. Add it all up, and the City will be weaker than ever.
In reality, if Octopus decides to list its shares in New York it will confirm the decline of the London market into global irrelevance – and a Labour government will finish it off.
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