The City needs a Thatcher-style revolution
Fifty years after Thatcher took charge, the City of London faces a crisis of confidence and capital— and only bold, radical reform in her spirit can revive its global standing, says Tim Focas
Hard to believe, but it is 50 years since Margaret Thatcher took the helm of the Conservative Party. Though her tenure as leader of the opposition began with more friction than fanfare, the economic revolution she later engineered left an indelible mark on the UK. Nowhere more so than in the City of London.
The “Big Bang” deregulation of 1986, often hailed as her most transformative economic policy, turned the Square Mile into a global financial powerhouse. Back then, Thatcher understood that confidence, competitiveness and capital don’t materialise from ministerial soundbites. They respond to radical structural change.
Half a century on, the City again finds itself at a crossroads. Listings are drying up. Firms that once proudly floated in London are now voting with their feet, de-listing, or choosing New York, Zurich, Stockholm or even Riyadh instead. In 2021, London accounted for five per cent of global IPO activity. Last year, it was just 0.5 per cent.
Britain doesn’t need another roundtable
And yet, policymakers continue to fiddle at the edges. Labour’s Rachel Reeves has announced some, let’s face it, modest reforms to pension fund investment strategies and promises to “make Britain the best place to start and grow a business”. But we’ve heard this before. If anything, this technocratic tinkering feels like the kind of consensus-led caution Thatcher scorned.
The UK doesn’t need another roundtable. It needs a Thatcher-style revolution.
The crisis in the London markets is not just about red tape or regulatory detail. It’s about ambition. The City has lost its swagger. The post-Brexit malaise, coupled with timid reforms and a risk-averse investment culture, has neutered our primary markets. British institutional investors have all but abandoned UK equities, with a measly four per cent of UK pension fund allocations going into domestic stocks, compared to 39 per cent in the 1990s.
A modern-day Thatcherite approach would tear through this stasis. She would not be afraid to confront entrenched interests, whether in Whitehall, the FCA or the actuarial old guard. She would call out the self-defeating conservatism of pension funds that hoard gilts while British growth companies are starved of scale-up capital. And crucially, she would legislate boldly to reward risk, innovation and ownership.
We need radical measures. Urgent tax incentives for UK listings, a serious rethink of capital gains treatment on long-term equity investment, and mandatory domestic equity allocations for large-scale pension funds. We need to overhaul corporate governance codes that have gone from protecting investors to smothering boards in box-ticking compliance.
The underlying problem is psychological as much as structural. Thatcher once said, “watch your thoughts, for they become actions”. Right now, the City’s thoughts are gloomy. The message we’re sending to founders, CEOs and investors is that London is second-rate. And unsurprisingly, they’re acting accordingly.
This is the moment to reframe that narrative. The political stars are aligning for a reset. A Labour government with a fresh mandate means the financial sector knows that change is coming. The trouble is that it looks like this change will be cosmetic, rather than courageous.
Thatcher didn’t wait for permission. She didn’t try to please everyone. She identified the enemy, in the 80s that was stagnation, and went to war with it. The City needs that energy now more than ever. The status quo is costing us capital, credibility and global influence.
The last Big Bang lit up London for a generation. We don’t need to replicate it. We now need to channel its spirit. Without bold reform, the lights in the City may dim permanently.
Tim Focas is head of capital markets at Aspectus Group