Hopeful signs for London Stock Market but still so much more to do

THE City of London has embarked on 2026 with a palpable outbreak of optimism. The FTSE 100 breaching 10,000 points is one driver of sentiment; the expanding IPO pipeline is another.

Of the 23 London listings in 2025, 11 took place in the fourth quarter, according to EY data, including the challenger bank Shawbrook and Pathos Communications, a PR agency. There are more to come – and that flow feels like it will be almost regardless of the turn that geopolitics takes. So much for the recent doom and gloom.

This year, the public markets will prove to be the natural solution for the glut of private equity-backed assets struggling to service debts. And the regulatory reforms the Quoted Companies Alliance and others have campaigned for consistently will also bear more fruit. They include the changes to UK listings rules 18 months ago and prospectuses coming shortly that mean the process of bringing a company to market is more flexible, founder-friendly and internationally competitive. The fresh focus on supporting retail investors and rethinking ineffectual “capital at risk” warnings is also welcome.

There is more to do, including driving pension and ISA cash into UK equities and extending the stamp duty relief for IPOs to the whole market. This government has its challenges but the clear correlation of a healthy UK capital market with a healthy UK economy and the millions of investors whose fortunes are tied to them both continues to be an important north star. The City Minister, Lucy Rigby, has been such a frequent visitor to the London Stock Exchange I wouldn’t be surprised if she has her own security pass.

But I think it is worthwhile pausing to question where all this is going. In common with the government I want the UK to strive for growth, which takes many forms. And beyond the IPO tally and keeping track of the billions in capital raised, we must also focus on the absolute number of companies whose shares are traded in London.

I would dearly love 2026 to end with more UK quoted companies than it started. That’s one sort of growth to strive for. In 20 years, it has only happened three times: in 2006, 2007 and 2021. Despite the momentum I describe above, I cannot confidently claim this will be another, much-needed “up” year.

I would be delighted to be proved wrong because volume matters just as much as value. Such a lot of London’s reputation as a world-leading capital market comes from its breadth. Unlike many other financial centres, megacaps trade stock here alongside microcaps. More than half of London’s quoted companies have a market value of less than £100m. They embrace numerous industries and regional geographies – a UK-wide network of productivity. At the QCA, we believe London can and should be the pre-eminent capital of growth capital to support them all.

More quoted companies overall certainly means replenishing stocks – but also retaining those that are here already. One category feeds the other. The most powerful marketing tool in any industry is the advocacy of happy customers. In recent years, too many companies have been lost from the market because of excessive cost, weak liquidity and opportunistic takeovers. Despite progress elsewhere, for a lot of stocks these issues remain. This year must be the year we tackle them head on so that the market as a whole can revel in net gains.

That means encouraging capital into our smallest public companies to plug funding gaps and encourage realistic company valuations. The Mansion House Accord, signed by numerous pensions providers and insurers, is not yet benefiting the AIM and Aquis growth stocks that are within its purview. The British Business Bank – the UK’s economic development bank – is not active in this area either. Alex Depledge has brought an entrepreneur’s instincts to the heart of HM Treasury but alongside that it is vital quoted companies are recognised for their scale-up potential too.

AIM companies are currently at a significant disadvantage to similar private companies when it comes to attracting investment. The 100% business property relief on up to £2.5m of private assets is drawing capital out of AIM, where relief now stands at 50%. At least £1bn has drained from the growth market since the Chancellor changed incentives. All quoted companies want is the playing field between public and private to be levelled. Meanwhile, income tax relief on venture capital trusts – a great source of capital for early-stage growth companies – is due to fall to 20%. Experts predict a dive in funding later this year as a result.

And then there is the cost and complexity of being a quoted company. Audit costs must be reduced, and the choice of auditor for the smallest stocks widened. We would like to see an urgent review of corporate reporting requirements including of the annual report and accounts which grows on average by 4,600 words a year. Last autumn the Business Secretary Peter Kyle put private companies ahead of public by stripping back some of their reporting requirements including the need to produce a strategic report. It was the wrong priority.

Finally, we welcome the direction of travel set out by the London Stock Exchange in its reform of AIM. But to amplify the momentum we begin 2026 with we need to see these changes happening faster to give all market users certainty.

James Ashton is Chief Executive of the Quoted Companies Alliance.