The report, A unified strategy for growth and prosperity, supported by EY, is based on extensive data analysis and more than 30 qualitative interviews with UK businesses, investors, advisers and market participants.

Key findings of the report

UK capital markets are evolving 

The UK’s capital markets play a vital role in the national economy — funding businesses, creating jobs, supporting home ownership, and growing pensions. 

However, in line with trends globally, the construct of the UK’s capital markets is shifting.

• The research finds that public markets remain a major funding source. However, fewer companies are listing on UK public markets, while more are leaving. Companies are also staying private for longer, and the decision on whether to join pubic markets is now more nuanced.
• Meanwhile, private capital markets in the UK are growing quickly, now providing £1.2 trillion in funding. Venture capital has grown by 20 per cent per year on a compounded basis, private equity by 11 per cent, and private credit by 43 per cent since 2013.
• The sustained growth of venture capital and private equity has also contributed to the continued growth of UK capital pools, with these capital sources accounting for 15 per cent of newly issued capital in 2024, compared with 5.0 per cent in 2013. Although its share of total capital issuance has decreased, capital sourced from public capital markets has still seen 4.0 per cent annual growth since 2013.

Chart showing evolution of yearly UK funding issuance over the last 10 years (£bn)

Promising UK businesses need support to scale

The report finds that there is an opportunity for around 17,000 further companies to access the capital they need to continue their growth journey. 

Funding also varies by sector, and there’s been a notable surge over the years in investment towards the technology, media and telecoms, and health and social wellness sectors.

Actions to help UK businesses and maintain competitiveness

The UK’s capital markets operate in an increasingly competitive global environment. To maintain the UK’s status as a leading financial centre, the report sets out a series of potential actions for government, regulators, and industry, including:

• Closer public and private markets links: Explore new innovations and solutions to support UK company growth and liquidity, including privately funded growth funds, crossover funds and the proposed Private Intermittent Securities and Capital Exchange System (PISCES) to better connect public and private markets and facilitate smoother transitions for companies seeking public listing.
• Regulatory reform: Ensure the Industrial Strategy aligns with other government initiatives regarding the modernisation of capital markets and the Pension Investment Review for example.    
• Targeted tax incentives: Remove the 0.5 per cent stamp duty charge on UK equity and restore the dividend tax credit for pension funds abolished in 1997.
• Government-backed funding schemes and innovations: Strengthen the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS), ensuring longevity beyond 2035 while reviewing funding limits and access requirements. Expand support for companies being spun out from university research (‘spin-outs’) to fuel the next wave of UK success stories.
• Greater support for businesses: Establish regional hubs to help start-up CEOs navigate investor negotiations, commercialisation, and UK tax incentives.

The report is being launched at an event this morning in the City, featuring a keynote speech from David Pinto-Duschinsky MP, Chair of the Financial Markets and Services APPG, alongside speakers from the British Business Bank and other industry leaders. 

Conor Lawlor, Managing Director of Global Banking, Markets and International Affairs, said: 

Our capital markets are vitally important to the economy – powering homeownership, driving business growth, and securing our financial futures. 

We have a world-class ecosystem of public and private markets, and a real opportunity to strengthen the way they work together to support the most innovative companies and national projects. 

By harnessing the full potential of private markets alongside public markets, we can ensure businesses of all sizes have access to the capital they need to scale.  This report makes clear; the tools to build stronger, more dynamic capital markets are already in our hands. Now is the time to use them.

Axe Ali, EMEIA Financial Services Head of Private Equity & Venture Capital at EY, said:

The UK has a strong history of innovation leading to economic growth, and has long been a top destination of choice to start and scale a business. This new research shows that while parts of the UK’s public financing market – which many businesses rely on for capital – are decreasing in size, the private market is growing rapidly. Closer public and private market collaboration could help to address financing imbalances across key UK regions and sectors, and ensure the UK’s most innovative, growing businesses can access vital capital. This will have a material impact not only on individual companies looking to scale, but on our economy as a whole.