Every firm that abandons its London listing makes the next departure more likely, says Paul Scully

During my four years as Minister for London, I championed our capital as a global business hub. I welcomed the work of the Treasury and the Financial Conduct Authority on reforms to make our markets more competitive. But as optimistic as I am, it’s too easy to see the power of our global hub erode through unintended consequences. I now watch with growing alarm as the rules designed to protect London’s markets are driving British companies away. The proposed Anglo American-Teck merger exposes a fatal flaw in our listing regime that could cost the UK billions in tax revenue and accelerate the exodus of British companies to North America, making Rachel Reeves’ difficult dash for growth even harder.

Last week Anglo American’s CEO refused to guarantee the company’s primary listing will remain in London long-term, stating he’s “not making any such pledge” despite currently planning to retain the LSE listing after their merger with Canada’s Teck Resources. The new company will disappointingly move its headquarters to Vancouver, but will remain incorporated in London with its primary listing on the London Stock Exchange (LSE). But for how long?

The combined entity faces ejection from Canadian indices because of its London incorporation, creating immediate pressure from index investors. When shareholder pressure mounts the gravitational pull toward Toronto or New York is likely to become irresistible.

© City A.M.