11 hours ago
Reform capital markets to boost British AI
T he UK's ambition to become a global leader in artificial intelligence is clear — £1 billion in public funding isn't small change.
But ambition without infrastructure is just rhetoric — and currently the country's capital markets are not fit for purpose. Outdated listing rules, heavy regulatory burdens, and a lack of access to retail and pension capital are steadily pushing Britain's brightest technology businesses into the arms of foreign private capital or overseas exchanges.
This is not just about AI. The UK is the world's third-largest technology ecosystem after the US and China. We lead in life sciences, advanced materials, and, increasingly, defence and security technologies — all areas that are buoyed by renewed EU and Nato spending.
Britain is increasingly becoming a leader in defence and security technologies
OLI SCARFF/AFP
These fields require scale, patience and flexibility; precisely what public markets should offer. Instead, AIM and the main market at the London Stock Exchange are shedding listings at an alarming rate. Rather than building global champions in London, top-tier companies are taking Silicon Valley capital or floating on the Nasdaq to gain access to deeper liquidity and higher valuations.
This matters because public markets offer scale, credibility and access to patient capital — and something private capital often does not offer: independence. Companies can raise substantial funds without ceding board control or investor consent rights, loading up on debt, or being pressured into an early exit. This is especially vital in biotech and defence, where long-term research and development needs room to breathe. Public equity enables bold innovation, not just the path to acquisition.
Yet our system is holding businesses back. Advisory fees remain high, disclosures are excessive, and digital tools are underused. Prospectus production, investor roadshows and compliance remain stubbornly analogue, adding needless cost and delay.
At the same time, domestic capital is missing in action. UK pension funds and retail investors are sitting on deep pools of money, but they are largely absent from growth-stage equity. Allocations to UK equities have fallen below 5 per cent, down from more than 50 per cent in the 1990s.
This is not just an investment gap, it's a strategic failure. We're training technology experts here, only to fund their growth and success abroad.
Reform is urgent. First, digitise the listing process: templated prospectuses, AI-enabled drafting, online roadshows. Second, strip out non-material disclosures and cap advisory fees. Third, unlock domestic capital: require small pension fund allocations to UK growth, expand Isa incentives, and scrap stamp duty to boost liquidity.
And crucially, make public markets central to our national technology strategy, not a nostalgic footnote. If we want to build and keep the next wave of innovators, we need markets that work for them.
David Ramm is a partner at the London office of the US law firm Crowell & Moring
