UK's Finance and Business Divide Remains Wider Than Ever Before

16 Sep, 2024

UK's Finance and Business Divide Remains Wider Than Ever Before

The Committee studying the financial state of British business did not shy away from criticism. After a comprehensive investigation, the government-appointed panel of economists and experts found that UK financial institutions were less supportive of domestic companies compared to their counterparts in Europe and the United States.

This group, which convened almost a century ago, was known as the Committee on Finance and Industry. Set up in 1929 under the leadership of Hugh Macmillan, it included prominent figures like John Maynard Keynes and trade union leader Ernest Bevin. Their conclusions highlighted a significant gap between British finance and industry, known as the "Macmillan Gap."

Today, the UK faces a similar issue. Politicians, investors, and regulators are concerned about the lack of financial support for domestic enterprises. The London Stock Exchange has seen a decline in listings, and British stocks trade at a discount compared to American equities. Entrepreneurs struggle to find financing, and the government's high debt levels make intervention difficult.

While various reforms have been introduced, including adjustments to pension rules and stock market regulations, the fundamental divide between the UK's financial sector and the broader economy persists, echoing concerns that have lingered since the Macmillan Committee's time.