If you’ve got an exciting IPO to market, don’t bother calling on Britain’s largest depository of savings. If it’s not the Debt Management Office on the line with news of another lorry load of gilt issuance, they won’t be interested.
Any investment strategy that relies wholly on the Government’s ability to keep servicing its debts from future tax revenues might seem just as risky as the rollercoaster of the stock market, if not rather more so when the productive part of the economy is dying from neglect. But that’s not the way the actuaries look at it.
If the pension funds aren’t buying, it leaves just retail and overseas investors to provide support, but they too seem determined to give UK listed equities the cold shoulder.
Who can blame them, when there are much better performing indices overseas to chase?
As a sweeping generalisation, the same goes for overseas investors, many of whom have yet to be convinced that Brexit was anything other than a wanton act of economic self-harm. A vicious circle of decline has been established, where selling begets more selling.
To restore international faith in the UK stock market we first need to help ourselves, and that means devoting a much greater proportion of GDP to savings and investment.
The consequent shift away from consumption requires a complete change in mindset and culture, for which there appears little or no appetite among the political class let alone the wider population.
The public say they want honesty from their politicians. Experience suggests otherwise. The party that promises only “blood, toil, sweat and tears” is unlikely to excel at the ballot box.
Fiddling around with half measures such as the idea of British-only Isas – already mired in Downing Street infighting – isn’t going to significantly shift the dial.
What’s required is much more radical action, such as making all UK investment capital gains tax-free, paid for by taking the axe to elements of the entitlements budget.
Electoral suicide, maybe, but the way things are going we won’t even have an economy left to save, let alone a stock market.
