Long-term vision is needed to revive stock market
Call it a typical week on London's shrinking stock market: US bids for the mispriced Alphawave and Spectris at lofty premiums of 96 per cent and 85 per cent; the board of Assura recommending a cash exit at the hands of private equity rather than a merger with the listed rival Primary Health Properties; and a reminder of the lingering effect of those 'class of 2021' floats, with Pod Point agreeing to a takeover at just £10.6 million versus its £345 million listing price.
Plus, of course, the enduring absence of anything resembling a pick-me-up IPO. This week is hardly an outlier, either. The last one saw Wise, the money transfer outfit valued at almost £11 billion, declare that it would be ditching its primary listing in London to join the exodus to the US already started by the likes of Ferguson, Flutter Entertainment and Ashtead.
No question, 'de-equitisation', to use the term of Peel Hunt research chief Charles Hall, is alive and well on the London market. And theories abound over how to reverse it.
Would things be better if our stock market wasn't owned by the London Stock Exchange Group: a data business that makes 96 per cent of its money from other stuff and whose £7.9 million-a-year boss, David Schwimmer, has no financial incentive to drum up floats? Could Rachel Reeves breathe some life into the market by abolishing stamp duty on share trading, typically levied at 0.5 per cent? (Given financial services are the UK's main growth engine, there must be worse uses of £4 billion). Is there a post-Brexit hangover that needs fixing via better alignment with the EU?
Answers are proving elusive. So, it's nice to see consultants McKinsey bring a bit of nuance to the debate. In a paper, Andrew Goodman and Tunde Olanrewaju note the 'negative narratives' but suggest any fix must be as much cultural as technical: a commitment from companies, investors, regulators and the government to 'focus on growth, reinvestment and long-term outcomes'.
Take the valuation gap between UK and US companies — a ratio of enterprise value (equity plus debt) to ebitda of an average 7.7 times over here versus 13.8 in America. That, McKinsey says, is because historical growth rates in operating profit — 7 per cent in the UK versus 13 per cent in the US — 'are influencing future growth expectations'.
On top, the US index gets pulled up by 'a preponderance of highly valued outlier companies' or 'champion stocks', while the UK's big guns have delivered 'relative underperformance'. McKinsey doesn't name names but contrast Apple and Nvidia to BP and GSK.
One reason for this? That, instead of investing in the business, UK companies 'typically pay more dividends'. They account for 'around 70 per cent of UK-listed returns' versus 'less than 40 per cent in the US'. Over here, income has trumped capital growth, with investors less willing to wait. Hence, McKinsey finding 'four times as many technology companies' in the top 100 companies of the US S&P index as among Britain's leading 100 public and private companies.
Mix excess dividends, lower investment, less patient investors and slower growth and it's no shock that UK companies trade on the sort of multiples that leave them ripe for takeover — not least by private equity. Indeed, McKinsey says 'take-privates' account for '18 per cent of private equity activity' in Britain versus 1 per cent in the US. It also sees 'evidence of stronger revenue growth' in companies taken private when they're free from quarterly reporting and high dividend expectations.
None of this is a quick fix. And, of course, it would help if bankers didn't bring the likes of Deliveroo, Dr Martens and THG to the market at insane prices. But McKinsey's analysis, also calling for a more pay-for-performance culture, implies that watering down the listing rules or corralling pension funds to invest isn't the answer either. If Britain wants a thriving stock market, it's time its participants proved they are willing to back long-term growth.
How time flies in politics. Was it really only on Wednesday that Rachel Reeves was banging on about Britain being 'the fastest-growing economy in the G7'? How long will that last? A day later comes news that the UK suffered its worst monthly contraction since October 2023, with the 0.3 per cent drop in April's GDP far worse than the 0.1 per cent decline expected.
The chancellor must have known March's 0.2 per cent growth was always going to be a bit of a mirage. Manufacturers had cranked up activity to beat Donald Trump's tariffs, as April's plunge in exports to the US implies: a £2 billion drop, or the worst monthly fall on record. And, at home, property buyers had rushed to beat April's stamp duty hike, while car buyers got in ahead of changes to vehicle excise duty.
Reeves has a case for blaming 'uncertainty… in the world' for some of her problems. But two big ones are completely down to her. April was also the first month of her swingeing rise in employer taxes, aiming to raise £25 billion a year, while no one compelled her to have a tax-and-spend budget that, under her own rules, left her with fiscal headroom of a skinny £9.9 billion. The result? Every economic setback will now trigger more damaging uncertainty over what taxes she'll raise at her next budget. Hardly ideal for a 'growth' chancellor.
Finally, a business remembering its USP: just a quid for 818 stores and 16,000 staffers. And to think it costs £1.25 in Poundland for a hanging plant pot squirrel decoration. True, Gordon Brothers is also providing up to £80 million of finance. Proof that Poundland can still be pricier than advertised.
alistair.osborne@thetimes.co.uk
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Telegraph
14 minutes ago
- Telegraph
‘It's absolutely f---ed': Why Google's new £1bn London office is in crisis
The crowning glory of Google's new, massive headquarters in London's King's Cross is its rooftop garden. More than 300m long, with hundreds of trees across four stories and a running track, star designer Thomas Heatherwick envisaged it as a haven for the tech giant's 7,000 staff, as well as bats, bees, birds and butterflies. At least, it is meant to be the crowning glory. However, delays to the project have meant that, while it is still under construction, the building and its garden have been invaded by foxes. The vulpine skulk has taken advantage of the building's lack of human occupants, digging burrows in the manicured grass and leaving their droppings around. 'Fox sightings at construction sites are pretty common, and our King's Cross development is no exception,' a Google spokesperson said after a report on the London Centric website. 'While foxes have been occasionally spotted at the site, their appearances have been brief and have had minimal impact on the ongoing construction.' The foxes, pests though they are, may be the least of Google's problems. Today, visitors to the construction site are met with the cacophonous sounds of drilling and hammering; the sights of scaffolding and cherry pickers obscuring the view; the constant bustle of workmen coming and going. The 11-storey building, the cost of which has never been confirmed but expected to be well north of £1 billion, still appears to be a long way from being completed. Building site sources tell The Telegraph that all manner of things have gone wrong, from shoddy workmanship that was, in effect, 'hidden' because of the vastness of the project to wooden floors that became so saturated with rainwater that they need complete repairs. Much of the ground floor, which is supposed to house shops and other public spaces, remains a shell. The date for its opening, which was meant to happen last year, has been repeatedly pushed back. 'If they get this job done by the end of 2026 it would be a f—ing miracle,' one worker tells me. 'I don't think the people building it know what they are doing.' An electrician says: 'They have unlimited money so they throw out ridiculous dates. It's going to be interesting, but very stressful and long hours.' (Both Google and Heatherwick Studio declined to comment on these claims.) There is a sense of gloom among those working on site. One worker simply says: 'It's absolutely f---ed, mate.' Another, who only started working on the project on Monday, describes it as 's--t'. Some might say that Google bosses should not be surprised that building its landmark has not gone entirely smoothly. Heatherwick, 55, has a habit of designing ingenious objects and places that are later found to be impractical, from a sculpture to commemorate Manchester hosting the 2002 Commonwealth Games to a New York visitor attraction later called a 'suicide machine' and London's Routemaster buses to Boris Johnson's abandoned Garden Bridge in the capital. The $2 trillion technology giant launched its quest for a London headquarters in 2013, when it commissioned a more typical office block from architects AHMM; by 2015, those plans had been binned as they were apparently 'too boring' for the tastes of co-founder Larry Page. Enter Heatherwick, who can be described as almost anything except 'boring'. He turned the concept of a giant office building (almost literally) on its head, and designed a long structure parallel to King's Cross railway platforms that is longer (330m/1,083ft) than The Shard is tall (310m/1,106ft). The finished building – dubbed a 'landscraper', as opposed to a skyscraper – will have nap pods for weary workers, as well as a 25m swimming pool and a basketball court. Plus, of course, the garden. The final design is a collaboration between Heatherwick's eponymous studio and that of Bjarke Ingels, the Danish architect. The team also worked on Google's (completed) California headquarters. Heatherwick was unlikely to design a run-of-the-mill office and always makes a point of doing things differently. He had a bohemian childhood as the son of a pianist father and jewellery-designer mother, and attended two private schools – Sevenoaks in Kent and the Rudolf Steiner School in Hertfordshire – before studying design at Manchester Polytechnic and London's Royal College of Art. It was at the latter institution that he met Terence Conran, the founder of Habitat and the Design Museum, whom Heatherwick impressed by building an 18ft-high gazebo out of laminated birch that sat in his garden. Conran became Heatherwick's mentor and famously described him as 'the Leonardo da Vinci of our times'. He has had his fair share of successes, most notably when he designed the Olympic cauldron for the 2012 London Games. It consisted of 204 copper cones, one for each participating nation, attached to long stems that wowed people the world over when they came together to create one larger vessel. Heatherwick, who was awarded a CBE in 2013, was also the driving force behind Coal Drops Yard, a stone's throw from Google's King's Cross building, that is a thriving hub of shops and restaurants after decades as a derelict wasteland. But for every Heatherwick triumph, there has been a misstep. His sculpture for the Commonwealth Games – named B of the Bang – was a cluster of metal spikes coming from the top of a column to imitate an explosion, but it was completed late and over budget. More concerningly, a tip of one of the spikes fell off shortly before it was unveiled and, when others threatened to do the same, it was dismantled in 2009. Manchester City Council sued Heatherwick and his contractors; the case was settled out of court. Other notable misses include Heatherwick's Routemaster buses, which were commissioned by Johnson when he was Mayor of London, which were much more expensive than other models and had a tendency to overheat in summer months, and the aborted plan for a Garden Bridge across the River Thames, which ultimately cost taxpayers £43 million without anything to show for it. Most destructive was the Vessel, a visitor attraction in New York's Hudson Yards. The copper-coloured network of 154 staircases and 80 landings was supposed to be New York's answer to the Eiffel Tower, but it was closed down in 2021 (after less than two years) after four people had killed themselves by jumping from it. Carla Fine, a local who is an expert on the matter, told The Telegraph at the time that it was a 'suicide machine'. It only reopened last October after netting was installed. 'The project met all the safety standards, and actually it went above them. It was just an extremely tragic, sad use that the project got put to,' Heatherwick told the Financial Times in 2023. 'Nobody predicted Covid and what that would do for people's mental health.' His current projects include transforming the Kensington Olympia in West London and turning the capital's BT Tower into a high-end hotel. Not a trained architect himself (but the employer of large numbers of them at his studio), Heatherwick has said that we are in the grip of an 'epidemic of boringness', with soulless glass-and-steel buildings populating cities all over the world. Heatherwick's eccentricity, which has been a characteristic for decades, is almost designed to attract opprobrium or eye-rolls from others in the field. As he finished his postgraduate studies, rather than make a business card Heatherwick made ice lollies that had his phone number on the stick; on various occasions he has shipped a snowball to China so that somebody there could experience British snow, and taken a kebab to Italy for someone else. 'I'm not a fan, because I think he doesn't know the difference between a building and a CD rack,' says Ellis Woodman, an architect and the director of the Architecture Foundation. 'There's no sense of scale, no sense of an urban idea that the buildings are contributing to. They disregard architectural history or the character of the spaces in which they stand. [The Google building] is not a building that's interested in making relationships with things around it. The work is always the most important building on its site, whatever he's doing. There's never a sense that the role of a building might be to contribute to the definition of a space with other buildings.' Heatherwick has become a big brand in the building world, in the way that Norman Foster and Zaha Hadid did before him. Woodman says that, with the quasi-utopian ideals he set out in his 2023 treatise Humanise, Heatherwick is 'carrying on that 'architecture-as-a-marketing tool' tendency'. 'He's not seriously engaged with the problems of housing or sustainability,' Woodman adds. 'It's a succession of projects like the Vessel, which one might ask if the world ever really needed.' Others in the design world reckon that Heatherwick's regular criticism by architects stems from a resentment that an interloper could gatecrash their industry without having to go through the same formal training. 'I'm very 'pro' him. He's a very creative and inventive figure, but he's divisive because he was trained in industrial design in Manchester, not in architecture,' says Charles Saumarez Smith, the former director of the National Gallery and National Portrait Gallery who is a distinguished historian of art and design. 'Architects view themselves in a professional way, and so obviously have not been so enthusiastic about him being globally successful as he has been as an architect. I think that is at the root of it.' Saumarez Smith tells me that he thinks Heatherwick's Google building is 'mind-boggling' and 'vast, but in a way it manages to disguise its scale. I'm looking forward to seeing it in more detail when it's finished'. How long before the Google building is finished, and what it will be like when it is, is anyone's guess. 'You can't fully know whether something's going to work until it's finished,' Heatherwick told The Telegraph in a 2018 interview. 'Anyone who says otherwise is lying. I get worried when my team aren't worried. Worry is a useful energy.' One wonders if Heatherwick feels worried about the Google HQ at the moment.
New Statesman
18 minutes ago
- New Statesman
The government is moving too slowly on AI
Photo by Jack Taylor / Getty Images for SXSW London When I first started grappling with the problem of AI and copyright as a minister in 2023, I grossly underestimated the difficulty: the two sides could surely be brought together to find compromises and workarounds. Sadly, it became ever clearer over months of talks that there was no mutually agreeable landing zone – we could satisfy the content creators or the AI labs, but not both. As the government approaches the first anniversary of its own forlorn attempts to find the elusive middle ground and temperatures rise on both sides, I've been urging them to take a different approach. First, let's think more clearly about where we want Jonathan Camrose Shadow minister for science, innovation and technology to get to. The eventual answer is surely a trusted, efficient marketplace for the use of copyrighted materials, where rights-holders can freely choose to license, sell or withdraw their property and developers can make rapid and affordable commercial choices. Prices will be set by supply and demand, with smaller rights-holders represented by collectives who process transactions on their behalf and distribute revenues. Second, what are the barriers that prevent us building such a marketplace? Among a great many, two stand out: offshoring and transparency. The UK can make any laws it likes, but any AI developer who doesn't like them can offshore training activity to a jurisdiction where they can legally conduct the same training with the same content. Not only would the problem remain unsolved for our rights-holders, but we would be pushing AI activity out of the country. Which brings us to transparency: there is a view that we could require any AI model used in the UK to declare all of the content used in its creation, thus solving the offshoring problem. I'm afraid this is wishful thinking. How would this vast quantity of information be sought, verified and audited? How would we enforce it? How would we establish a direct link between the expressed output and the suspected input? What if the training material is not copyrighted but an imitation of an imitation (and so on) of copyrighted material? I don't believe there is a form of words that can be made into a law that fixes AI and copyright in a way that satisfies all sides. I do, however, believe that a combination of technologies, standards and law can help us build the marketplace for copyright. Subscribe to The New Statesman today from only £8.99 per month Subscribe The key technology is going to be machinereadable digital watermarking that can be indelibly embedded in any file and would contain licence information. Crucially, rights-holders would need to easily (or automatically) apply watermarks to all of their material. This starts to address the transparency problem, but it only works if everyone agrees to use the same design – or at least to choose from a limited number of designs. It would depend, in short, on the existence of globally agreed technical standards – hardly a novelty in the internet age. Armed with such standards, governments would be far better placed to make the laws to create a fair and trusted marketplace for copyrighted materials. Globally standardised digital watermarks solve the transparency problem and transparency solves the offshoring problem. The government is moving too slowly. Technology is driving change more quickly now – it's time for boldness and agility. No country has solved this problem, and if we can then we have a chance to be a global leader in AI again. This article first appeared in our Spotlight on Technology supplement, of 13 June 2025. Related
The Sun
29 minutes ago
- The Sun
Major change to ID rules on cigarettes & vapes sparks fears hundreds of shops across UK will be forced to close
HUNDREDS of retailers fear they could go out of business over enforcing age bans on smoking and vape sales. Campaigning shopkeeper Paul Cheema says new laws could be the "final straw" as they deal with aggressive customers when asked for identification. 5 5 The move comes after the hard-pressed firms are already dealing with a hike in rising business rates and feel shoplifting in their stores is going unpunished. He has joined forces with 700 fellow shopkeepers amid fears asking for ID could lead to more violence in the shops. On-the-spot fines of £200 will be handed out by trading standards inspectors for selling tobacco, vape and nicotine products to underage customers. Anyone born after January 1, 2009 will not be able to buy tobacco as Ministers aim for the first smoke-free generation. The retailers have written to Business Secretary Jonathan Reynolds demanding more support for independent stores. Mr Cheema said: "The proposed laws will do nothing to stop the illicit trade, but will put us in the firing line when enforcement falls on shop staff. It'll be the final straw. "We all want to protect young people from smoking. "But badly thought-through laws won't do that – they'll just drive more sales underground, where nobody checks ID. "We're not asking for handouts. We're asking to be heard. The government is piling pressure on our sector from every direction:" "I've seen the government move mountains to protect 2,700 jobs in the steel industry – and rightly so. Police raid largest spice vapes operation after kids were left hospitalised "But there are 445,000 jobs in UK convenience stores, and we're being ignored." "Local shops like mine are part of the fabric of British life. We're open early, open late, and we're there for people when no one else is. "But there comes a point where enough is enough." There are also fears that adults will go to illicit stores to buy tobacco which will reduce the income for smaller stores. Tobacco sales account for 15 per cent of the sales with six million people who see smoking as a way of life. A government spokesperson said: "Small businesses are the lifeblood of our high streets, and our Plan for Change will help ensure they thrive. "We're taking tough action on shoplifters, and worked with retailers to help them get ready for the ban on single use vapes.' 5 5
