The Association of Investment Companies is calling on the new prime minister to help save the UK stock market, as increasing numbers of UK-listed companies are swallowed up by foreign buyers.
With Andy Burnham set to take office next week following Sir Keir Starmer’s resignation last month, the AIC said “bolder interventions” are required to save the stock market.
Low valuations caused by lack of investor demand are providing fertile ground for bargain hunters, the association said, while a lack of new IPOs is failing to plug the gap.
Analysis by broker Peel Hunt showed that the value of UK-listed companies subject to takeover bids was 27 times greater than the value of IPOs in the first half of 2026.
The AIC said the recent IPO of SpaceX in the US, with Anthropic and OpenAI expected to follow, is likely to further skew global index funds to the US which will reduce the allocation of those funds to the UK market.
Richard Stone, chief executive of the Association of Investment Companies, said: “The situation on the London market is now so serious that it requires bolder interventions to save our stock market. Abolishing stamp duty altogether would give the biggest financial return to the UK economy by encouraging more investors to buy UK equities and drive economic growth. The new Prime Minister also needs to do more to change the investment culture in the UK, building on the ‘Take the next step, invest’ campaign to raise awareness of the benefits of investing.”
Stone said it is vital to support businesses at an earlier stage of their growth journey by reversing the decision to reduce tax relief on venture capital trusts. The cut in tax relief from 30% to 20% is expected to lead to a sharp decline in funding for VCTs.
“If we don’t support our home-grown companies, we reduce the chance of seeing successful IPOs on our domestic market. We will also continue to see home-grown businesses head overseas, leading to the UK missing out on job creation and wealth.
“Investment trusts form a meaningful part of the UK market, making up 36% of the FTSE 250 and seven constituents of the FTSE 100. Investment trusts are currently subject to onerous double taxation given that the trusts themselves pay stamp duty when they buy UK shares, then investors have to pay stamp duty on the shares of the investment trusts,” he added.
