By Huw Jones
LONDON, April 26 (Reuters) - U.S. clean technology
subsidies are sucking capital from Europe, making it more urgent
to improve London as a global financial centre, business bosses
told UK lawmakers on Wednesday.
The Inflation Reduction Act (IRA), which offers $369 billion
of tax credits, research loans and grants for clean technology
investments in the United States, is making it harder to
persuade companies to list in London, they said.
"If we don't use domestic capital, the IRA will win. It's
the biggest shift in competitive dynamic in my career,"
GlaxoSmithKline chair Jonathan Symonds told a Treasury Select
Committee hearing on why UK companies are listing in New York
instead.
Pension funds in Britain, which have long preferred safer
assets like government bonds to stocks, need consolidation to
achieve scale for investing in start ups, Symonds said.
"A single Canadian pension fund invested more in one UK
private company in 2021 than all of our pensions funds in
private companies in the UK in the same year," added Julia
Hoggett, CEO of the London Stock Exchange.
The decision by UK chip designer Arm to list only in New
York has deepened soul searching in the City of London after
Brexit left the UK financial sector facing added competition
from Paris, Frankfurt and Amsterdam.
"The effect of what's happening through the Inflation
Reduction Act across the whole of Europe is like a dirty great
hoover on full suction mode," said Jonathan Hill, who authored a
government-backed report on reforming UK listing rules.
"It's reinforcing a mentality that the U.S. is sort of where
you want to be for business," Hill said.
Britain has already eased listing rules in line with Hill's
recommendations, and plans further changes.
Hoggett said obstacles need removing to improve research on
companies, streamline primary market rules, increase the amount
of available risk capital and ensure governance rules for listed
companies are in line with competitor countries.
"We have created an environment where comply or explain has
become comply or else," Hoggett said. UK listed companies
disclose whether they follow governance best practice or explain
why they do not, but critics say flexibility has been lost.
(Reporting by Huw Jones; Editing by Alexander Smith)
Messaging: huw.jones.thomsonreuters.com@reuters.net))
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