Rachel Reeves left red-faced as London Stock Exchange suffers £9.6bn cash withdrawal

The London Stock Exchange saw a staggering £9.6 billion in cash withdrawals last year, making it the worst year on record in a fresh blow to .

This has raised alarm bells over Britain’s ability to compete on the global stage against US and global stocks.

The new figures from data provider Calastone show investment across the London Stock Exchange is slowing, leading to and foreign takeovers reaching a 14-year high.

This creates a vicious cycle as a lack of investment puts companies off choosing London to list new shares, in turn leading to fewer investments.

Since 2015, the London Stock Exchange has seen outflows of , amounting to £45 billion.

Calastone’s Edward Glyn warned that investors as they “shun” the London Stock Exchange following a poor year.

He told : “The UK stock market badly underperformed most of its peers in 2024 and this has only intensified the extent to which UK-focused funds are being shunned by investors.

“UK equity valuations are clearly cheap, but investors are capitulating, seemingly giving up hope that a long-awaited re-rating will occur.”

Despite last year’s disappointing numbers, cash outflows from UK-focused equity funds stood at a whopping £12 billion, and funds from UK-based investors reached £27.2 billion – an increase on the £19.8 billion in 2021.

Experts have suggested scrapping stamp duty on share purchases and allocating pension funds to UK stocks. The Financial Conduct Authority has also changed some of its rules to make the London Stock Exchange more appealing.

Currently, 6.6% of pension pots , which marks a decrease from 7.6% last year.

This is a relatively small amount compared to other major economies around the world. In Canada, pension schemes invest four times more in infrastructure than in the UK, and in Australia they invest 10 times more in private equity.

The London Stock Exchange has backed Government reforms to boost the market, adding that it’s undergoing “the most dynamic set of reforms anywhere in the world right now”.