Unfortunately, the less mature smaller companies typically generate less cash, or indeed they are sometimes cashflow negative because they are investing faster than they generate profits.
Given this backdrop, it’s inconceivable that a new government might toy with removing a mechanism which incentivises institutions and individuals to back these companies.
The irony is that it is exactly these smaller, innovative UK companies that both parties have said they want to invigorate and channel capital towards.
The Conservative Party’s Mansion House reforms last year outlined these ambitions and Labour in its central commitment to power UK economic growth through private investment.
Smaller quoted companies are the UK’s engine of growth.
The UK is near unique in having a viable smaller companies exchange. When it thrives, it outperforms the major stocks because of “the smaller company effect”.
Post-Brexit, we all need those companies to thrive even more than before.
But that isn’t even the best bit.
Quoted small-caps are socially useful.
When they thrive, they create additional skilled employment and productivity improvement that leads to sustainable wage growth above inflation.
Successful smaller companies even end up paying additional tax to the Exchequer – all because they are local. When listed smaller companies succeed, they deliver good outcomes for the whole electorate.
Over recent months, private investors have contributed to a broadening political discussion as to how the Government can keep a larger portion of British savings invested in UK-quoted companies.
This is one area where the Conservatives and Labour wholly agree.
Introducing Isas dedicated to UK-quoted companies – the so-called Great British Isa – would boost UK business investment and ultimately increase tax revenue.
Indeed, Premier Milton Investors was the first company to call for the GB Isa in this newspaper back in September 2023.
An additional £5,000 annually invested exclusively in UK companies could provide a significant boost to British plc.
But alongside this, whatever our political leanings, we all have an interest in keeping the Aim market viable at this time of economic stress by retaining its inheritance tax relief.
Driving private investors’ capital overseas now would be cutting our nose off to spite our face.
A wilful act of self-harm against companies, investors, and the entire electorate – and one we must strive to avoid.
