Two years ago, the British press was full of news about leaving the European Union (which the UK did formally on January 31, 2020). It was a theme which had dominated the media for years, and there seemed little sign of it changing. Then, news began to emerge of a strange new respiratory virus in a Chinese city called Wuhan…
Now, the worst excesses of COVID-19 seem to be abating, and parts of the world are starting to shake off the strictures of lockdown. We have found, perhaps to our surprise, that life goes on. It is very far from business as usual—adaptation is one of the key skills of the new economic landscape—nevertheless, the world keeps turning, and we must turn with it.
So, what is it like in the UK? What are the opportunities for entrepreneurs, investors and business leaders? How has the landscape changed? Is the UK economy different than it was before?
At the moment, London is a thriving center for the tech industry, home to more than 60 unicorns, according to the annual report of growth platform Tech Nation. Some are growing at an extraordinary rate: DivideBuy, a lending platform, reported average growth of 20,733 percent over a three-year period, while Popsa, a photobook specialist, went up 10,576 percent. And IPOs are on the rise, too; technology and consumer internet listings accounted for more than half of total capital raised in the first six months of 2021.
This development should be prominently on the radar of investors and others. London has traditionally lagged behind the U.S. for tech floatations, but the momentum is firmly on the eastern side of the Atlantic right now. One reason is that tech is becoming understood in a broader context; it is no longer just software and social media, but the heart which drives platforms in all sectors—and that is where London gains an advantage. The capital has strength in depth in areas like energy, telecommunications and financial services, and that infrastructure increasingly gives it the edge over not just Amsterdam or Frankfurt but even New York.
Observers from the U.S. should also be aware of the emerging regulatory environment. The UK government sponsored a review of how companies raise money on the capital markets, led by former cabinet minister and EU commissioner Lord Jonathan Hill of Oareford. Its recommendations were published with a distinctly deregulatory flavor and have been warmly welcomed by the UK Treasury. Chancellor Rishi Sunak remarked: “Our vision is for a more open, greener and more technologically advanced financial services sector.”
That vision is being delivered on a number of fronts. The prospectus regime for companies seeking finance will be reviewed and made “less burdensome” (code for less exhaustive and rigorous). The government also intends to relax the rules on dual-class shares, allowing differentiated voting rights but only for up to five years and with a maximum voting ratio limited to 20:1. The free float requirements will also be reduced from 25 percent to 15 percent.
All of this is a strong sign of intent. The political establishment has argued bitterly over a vision for the UK after Brexit, but a constant theme has been the creation of a free-market, light-touch-regulation, agile trading hub modelled in part on Singapore and the ghost of colonial Hong Kong. The current conservative administration, pandemic notwithstanding, has a buccaneering wind in its sails, and the effects on investment are clear.
However, there is something more, something besides share prices and rules and floatations. There is, unquestionably, a new mood in the City of London. Like any financial hub, it still bears the scars and the bloodied hands of the financial crisis. But financial services are growing in confidence, beginning to point to the contribution they make to the wider economy and realizing that they have somehow survived the worst of the pandemic.
This new mood combines relief—life, as I noted earlier, goes on—and eager openness. The UK has much to prove in the wake of Brexit, as witnessed by the hyperactivity of international trade secretary Elizabeth Truss, forging deals around the world. Early predictions of the collapse of UK financial services have been proved wrong. Fund managers are looking at new regulation changes; the overall European market is fracturing among Amsterdam, Frankfurt, Dublin, Luxembourg and Paris; and current estimates are that only 7,400 jobs have been relocated from London to other European centers.
London is firmly open for business, and that is a message emanating from the gleaming towers of the city, the corridors of government and the flashing screens of the stock exchange. There is a sense that anything is possible. Anyone who works in business or finance should prick up their ears, and maybe look at upcoming flights to London.
Eliot Wilson is the cofounder of Pivot Point, a change management, strategy and PR consultancy based in London.