Britain needs wider share ownership

Foreign institutions are buying up more and more of Britain's companies. And that matters far more than most people realise, says Matthew Lynn.

Who owns Britain? According to the latest figures, it isn't you or me. It isn't even the big insurance and pension funds, although they have a far larger slice of it than ordinary individuals. Increasingly, it is foreign institutions. And that matters far more than most people realise. In the 1980s, Margaret Thatcher's Tory government campaigned for wider share ownership. It's time some of those ideas were revived. The Office for National Statistics last week published data that showed ownership of UK quoted firms has changed significantly in the last few years. Individuals now own just 10% of the shares quoted on the London market, down from 13% in 2006, and from 54% in 1963. That is an all-time low.

Meanwhile, the proportion held by foreigners has risen dramatically. Foreign investors now account for 42% of London-listed shares, compared with 28% back in 1997. Insurance companies account for 13%, while 'other financial institutions' (mainly hedge funds) account for 10%. The balance is made up of unit trusts, charities, and, rather ominously, the government, which now owns 1% (mainly Royal Bank of Scotland hardly the basket you'd want all your eggs in). It's true that individual share ownership has been on a steady downward trend ever since the figures first started to be published in the 1960s. In part, that reflected the rise of the big unit trust and pension firms, which owned shares collectively. In the 1980s and early 1990s, however, the percentage at least held steady at around 20%. But under this government, it has halved again. On current trends, it will expire completely in another decade.

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Matthew Lynn

Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years. 

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.