The British government must resist the temptation to veto takeovers or block delistings. Better to tackle the causes of the malaise
and Tesco , have dropped from the top tier of their industries owing to the chronic British disease of poor management. That has dragged down returns and made some firms vulnerable to takeovers. The entire asset-management industry, which has the job of supervising other firms, is badly run. Britain’s most valuable fund manager is now worth less than 10% of America’s largest. British pension schemes have spent years loading up on bonds and selling shares in a myopic quest to eliminate risk.
The City’s final weakness is a dearth of startups that choose to list in London. In 2005 London hosted one-fifth of the world’s initial public offerings ; today, it hosts one-twenty-fifth. A stock exchange that continually fails to attract exciting new firms will come to resemble a museum. For the City, the stockmarket matters a great deal. London remains a dominant centre for trading debt, derivatives and currencies, but equities are a crucial part of any claim to be a global financial centre. Listed firms exert a pull on other financial activities, and on the accounting and legal services that cater to them.
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