CBI Calls for Stamp Duty Removal to Revive London Equity Markets
London Market at a Crossroads
The Confederation of British Industry (CBI), backed by more than 30 FTSE 100 executives, has called on the UK government to abolish the 0.5% stamp duty on share transactions.
CBI argues that the levy discourages investment in British equities and contributes to the ongoing decline of the London stock market’s competitiveness.
This comes ahead of the Mansion House speech by Chancellor Rachel Reeves, where reforms to reignite UK capital markets are expected. Without urgent intervention, many believe London risks falling further behind global financial hubs such as New York, Frankfurt, and Singapore.
The Burden of Stamp Duty on Participation
The UK’s stamp duty on share purchases is viewed as a major barrier for retail investors and a drag on trading volumes.
Platforms like Hargreaves Lansdown and AJ Bell say the tax deters new investors and reduces liquidity especially in smaller listed firms.
Peel Hunt, a prominent City brokerage, argued that “removing the tax would be the single most effective move to improve the UK market’s prospects”.
Critics say that while stamp duty generates modest government revenue, its long-term cost in lost market participation and innovation is far higher.
Decline in Listings and Capital Flight
Since Brexit, UK capital markets have faced serious headwinds, with a wave of companies choosing to delist from London or seek IPOs overseas.
Foreign listings like Arm’s Nasdaq debut have further spotlighted London’s waning appeal.
At the same time, UK pension funds have cut domestic equity exposure from nearly 50% in the 1990s to under 5% today.
A joint letter led by CBI and industry leaders warned that “the UK faces an existential challenge to its capital markets” if structural changes aren’t made. Ending stamp duty, they argue, is a logical first step.
Creating a Retail Investment Culture
Beyond removing stamp duty, the CBI has outlined a series of measures to deepen retail engagement.
These include scrapping stamp duty within ISAs, introducing educational campaigns, and giving tax breaks to investors in small‑cap UK stocks.
The group argues that the UK lacks a true “shareholder culture” and that retail investors need to feel incentivized to support British businesses.
This effort aims to not only increase participation but also rebuild confidence in the long-term value of UK equities as global economic competition intensifies.
A Strategic Window for Reform
The call to eliminate stamp duty arrives at a critical moment.
With declining listings, weak IPO activity, and dwindling pension investment, many believe the UK equity market is at a turning point.
Reforming the tax code could help reverse these trends and encourage a more active and engaged investor base.
The CBI’s recommendations set the stage for a broader rethinking of the UK’s financial ecosystem and whether or not political leaders act now may define London’s role in global finance for decades to come.
Recent Comments