By Financial News Team | July 9, 2025

The Confederation of British Industry (CBI) has issued an urgent call to action, warning policymakers that the London Stock Exchange (LSE) stands at a crossroads. Faced with a dramatic fall in new listings, migration of companies to foreign rivals, and shrinking investor confidence, the CBI outlined a comprehensive 20-point plan designed to restore the City’s competitiveness in the global capital markets.

London’s Global Standing Under Threat

The UK’s flagship stock market, once hailed as the gateway for global capital and a springboard for British companies, has been beset by a wave of departures and dwindling Initial Public Offerings (IPOs). According to data from the London Stock Exchange Group, the number of new listings in London fell by 41% between 2021 and 2024, reaching its lowest point in over a decade. High-profile departures such as the chip designer Arm, which chose a New York float in 2023, and ongoing speculation surrounding AstraZeneca’s potential US move have rattled investors and policymakers alike.

As of mid-2025, the total market capitalization of the LSE, at £3.33 trillion, now lags behind both the New York Stock Exchange and Hong Kong Stock Exchange. The LSE’s share of global equity capital raised is now below 2%, compared to more than 10% in 2006—a sharp decline that has prompted urgent calls for intervention.

20-Point Plan to Rescue the Market

In its report, the CBI recommends a series of aggressive reforms to halt the LSE’s drift “into irrelevance.” Chief among these is the proposal for tax breaks, including making the costs of floating shares or conducting an IPO tax-deductible. This, they argue, would remove a significant financial barrier for companies considering a London listing, freeing up capital for reinvestment and growth. Currently, companies have to absorb these expenses, which in competitive markets can tilt the scales toward New York or Asia.

Another headline proposal is the loosening of bonus and compensation rules for executives, especially non-executive directors. CBI notes that the UK’s strict corporate governance code, which prohibits non-executives from receiving share-based pay, may be fostering a risk-averse board culture that stifles innovation and growth. The association advocates for a review of these restrictions so that boards are incentivized to take calculated risks, citing evidence from chairs and leaders from FTSE 100-listed multinationals.

Leveraging Global Uncertainty—and London’s Unique Strengths

The CBI report also encourages government to capitalize on global market uncertainty, particularly in the US. With a more unpredictable regulatory climate under Donald Trump’s administration, the UK could position London as a stable, competitive alternative for secondary listings by international firms. The CBI singles out fast-growing Asian companies, many of which are reportedly reassessing the US due to increased scrutiny and tighter regulations. By streamlining listing requirements and offering competitive incentives, London could become their preferred European base.

Broader Reforms Ahead of Mansion House Speech

This intervention comes just days before Chancellor Rachel Reeves’ highly anticipated Mansion House speech, in which she is expected to outline the government’s financial services strategy. The Labour government has already signaled its intent to reform Individual Savings Account (ISA) rules, liberalize pension investments, and accelerate City deregulation to stimulate economic growth and keep London at the forefront of global finance.

The CBI’s report, built on feedback from more than 30 UK-listed firms—including blue-chip companies and investment houses—emphasizes that challenges are not unique to London. Global markets are contending with the rise of private capital, the surge in passive investment vehicles, and an overall shift of investor attention toward the US. As Rupert Soames, Chair of the CBI, commented, “These pressures are universal, but they also represent an opportunity for innovative policy solutions that can restore London’s allure to both companies and investors.”

Industry Voices: Striking a Balance on Governance

While maintaining robust standards that attract international investors, CBI argues the UK must carefully weigh the unintended consequences of overregulation. The current system’s emphasis on non-executive independence may have inadvertently created risk-aversion, discouraging bold decisions required for growth. CBI’s suggestions for bonus reform are controversial, as critics fear they could erode good governance practices, but the group insists that carefully structured incentives are key to attracting and retaining global talent on British boards.

A Decisive Moment for City Competitiveness

Analysts and City officials agree that without swift intervention, London’s status as a premier financial center could be irreparably damaged. In the first half of 2025, London saw just 15 IPOs raising £970 million, far behind New York’s 54 IPOs at $18.2 billion and Hong Kong’s 34 at $6.5 billion, according to Dealogic.

“London remains well-placed to serve as a bridge between East and West, but it needs proactive support from both government and regulators to thrive,” said Helen Thomas, chief executive of financial consulting firm BlondeMoney.

London’s financial sector is eagerly awaiting the government’s next steps. The CBI, along with fellow business leaders, stress that a bold, coordinated agenda—including smart tax policies, incentives for innovation, and targeted deregulation—could halt the City’s decline and restore its leadership in the global race for capital. Whether the government will act decisively remains to be seen, but the stakes—both for the capital and the wider UK economy—could hardly be higher.