Equity markets are seen as the domain of huge, multi-national businesses, yet this misperception ignores a vital part of the British economy – small and mid-size quoted companies, of which Yorkshire has more than its fair share.
The region’s entrepreneurial spirit has made Yorkshire home to one of the biggest PLC concentrations outside London.
While we only have two FTSE 100 companies, Bradford-based supermarket Morrisons and York-based housebuilder Persimmon, and a dozen FTSE 250 firms, the vast majority are plucky firms outside the FTSE 350.
The Quoted Companies Alliance (QCA) estimates that Britain’s 2,000 small and mid-size quoted companies make up the majority of those accessing public equity financing, representing 80 per cent of all quoted companies in the UK.
This is in stark contrast to the rest of the European Union, where only 6,000 of the 23 million SMEs are quoted on the stock market.
Most raise finance through debt, but with bank finance in short supply, the QCA is calling on governments in Whitehall and Brussels to allow companies access to public and private equity markets to fund growth.
The QCA has launched a campaign to remove obstacles that prevent SMEs, which it describes as the UK’s engines of growth, from creating wealth and employment.
Yesterday the organisation launched its manifesto calling on politicians and regulators to address a unique combination of disadvantages that are curtailing the potential of small to mid-size quoted companies.
The policy document, Fuelling the Engines of Growth, has laid out a six-point agenda for whoever wins next month’s General Election.
The QCA wants the Government to create a minister for equity finance; enhance tax incentives for equity and entrepreneurs; make small and mid-size quoted companies a distinct economic category; simplify the process of raising public equity; introduce a time-out on new business regulations and foster a long-term equity culture.
The QCA said that while it welcomes the return of growth, strengthened consumer confidence and falling unemployment, the serious flaws and imbalances in the economy must be addressed to create more stable, sustainable growth.
Britain has a high proportion of small to mid-sized quoted companies, worth over £350bn in total, with a combined turnover of £180bn and employing 1.6 million people, which makes up more than six per cent of private sector jobs.
Tim Ward, CEO of the QCA, said: “Britain is a pioneer of equity funding, a long-established mechanism that remains highly effective today. Investing in shares nurtures great businesses, encourages innovation, provides employment and creates prosperity, limiting the need for public expenditure.
“We are launching this manifesto so that politicians and others will better understand equity funding and promote the conditions in which it can thrive.”
The QCA believes that a new Government minister to champion equity markets could help create a permanent equity culture in the UK, as we have seen in the US.
Interestingly, it is also calling on schools to teach pupils how stock markets work, their history and the risks and rewards of capitalism.
At a time when many people view big conglomerates with distrust and distaste following the numerous banking scandals, the uproar over tax avoidance by big name high street firms and the news of a Which? super-complaint against the supermarkets, this is a vital message.
We need future generations to know that capitalism can be a force for good and a force for evil.
Small businesses not only fund the Government’s coffers, they also provide employment for the next generation of entrepreneurs and the new Government, whatever hue it may be, needs to address this.