London’s stock market is facing its sharpest test in years as a shrinking number of listed companies, weak domestic investment and a thin pipeline of flotations fuel doubts about the City’s ability to compete with New York.
The number of companies listed on the London Stock Exchange fell from 2,429 in 2015 to 1,534 in May 2026, according to LSE data compiled by Statista. More than 30 companies have left, or are preparing to leave, the market this year, including Schroders and easyJet, which have agreed to US takeovers.
Julia Hoggett, chief executive of the London Stock Exchange, rejects the idea that the exchange is in terminal decline. She argues that London’s problems reflect a broader collapse in the number of companies choosing to go public, rather than a uniquely British failure.
“The UK was the last major market to make that shift,” Hoggett said. “I suspect that’s why commentators have mistaken a global structural shift for a specifically British problem.”
London stock market reforms put to the test
Since taking charge in 2021, Hoggett has overseen a programme of reforms intended to make London more attractive to ambitious companies and international investors.
Changes to the UK listing regime introduced in July 2024 removed the requirement for shareholder approval for most significant transactions, while giving founders greater scope to retain control after an initial public offering. The Financial Conduct Authority said the reforms were designed to reduce regulatory burdens, although shareholder votes remain necessary for reverse takeovers and some decisions to cancel a listing.
The exchange has also eased rules for companies on AIM, its junior market, and launched Pisces, a venue intended to facilitate trading in shares of privately held businesses. Hoggett said the changes were already influencing corporate behaviour, with more acquisitions taking place since the voting requirements were scrapped.
UK mergers and acquisitions were worth £124.2 billion in the first half of 2026, more than double the value recorded during the same period a year earlier, according to PwC. The number of transactions nevertheless fell.
Hoggett’s strongest evidence of a possible revival is the number of companies considering a London flotation. “We have the largest pipeline for IPOs since 2005,” she said.
Britain remains a significant source of high-growth businesses. The country produces more billion-dollar start-ups than any nation other than the United States and China, according to the Hurun Research Institute, while UK IPO proceeds more than tripled in the first six months of 2026 compared with the same period last year, according to EY.
London also recorded more than twice as many equity offerings as the next busiest European exchange during the first half of the year. Its international reach was underlined by the £603 million flotation of Uzbekistan’s National Investment Fund, the country’s first international equity offering.
But the headline figures remain weak. Only seven companies listed in London during the first half of 2026, raising a combined $780 million. By comparison, 72 US IPOs raised $128 billion over the same period.
The disparity has intensified criticism from business leaders, including Greg Jackson, founder of Octopus Energy, who has said the exchange needs more “hustle” to win new listings.
Hoggett argues that companies which move to the US do not necessarily fare better. Of 21 UK companies that have floated in America since 2014, four are trading above their listing price, 13 have since delisted and the remaining four are down by an average of 71 per cent, according to LSE data.
She also points to the different support available to companies in London. A mid-sized business can enter a major index soon after listing, potentially creating automatic demand from pension funds and exchange-traded funds. In New York, that benefit is generally limited to the largest companies.
“We need to stop creating these false binaries,” Hoggett said. “Especially since many UK companies that moved their listings to the US have underperformed or failed outright.”
Calls for more UK investment
The exchange’s difficulties have been compounded by the comparatively small pool of domestic capital available to support British companies. UK households and institutions hold a greater proportion of their wealth in cash and property than in equities, while the country’s pension and individual savings systems do not require tax-advantaged money to be invested in British companies.
Hoggett supports proposals to encourage more domestic investment. Pension tax relief is estimated to cost about £50 billion a year, while ISA relief costs roughly £9 billion, yet neither system requires a share of that money to be invested in UK-listed businesses.
“If we are going to give you fiscal incentives to invest, we’d like at least a portion of that to be backing Britain,” she said.
She believes the country’s cautious investment culture has also played a part. “We have a culture focused on protecting people from downside risk rather than exposing them to upside potential,” she said.
The LSE is betting that new technology can help it compete over the next decade. It plans to launch LSE 24, a separate venue designed to allow near-continuous trading from Monday to Friday, outside the traditional 8am to 4.30pm session.
Client testing is due to begin by the end of 2026, with exchange-traded products expected to be the first asset class available in the first half of 2027, subject to regulatory approval. Equities could be added at a later stage.
The project will use the London Stock Exchange Group’s digital securities infrastructure. LSEG has also entered a partnership with Payward, the company behind Kraken, to explore regulated markets for tokenised public equities.
For Hoggett, the future of the London stock market depends on making public ownership more useful to companies and investors alike.
“Capital markets are a vital, direct driver of growth, jobs and national prosperity that most countries treat as a matter of economic sovereignty,” she said.
Whether London can turn its reforms, international connections and planned technology upgrades into a sustained recovery will depend on persuading founders to list, investors to buy and British companies to remain in the market once they have arrived.
