Start-ups should be made to hand back Government subsidies and tax breaks if they list abroad or move their offices outside the UK, the finance sector trade body has said.
UK Finance said early-stage companies should receive more state aid than under current measures, but it must be a “two-way commitment”.
London’s stock market has suffered a number of setbacks in recent years, with a slew of British companies choosing to list in the US.
Notably, the Cambridge-based computer chip maker Arm listed in New York last year, in a mammoth 54 billion US dollar (£42.3 billion today) flotation.
The decision flew in the face of heavy lobbying by successive prime ministers including Rishi Sunak, and was described by analysts as “a kick in the teeth” for London at the time.
UK Finance suggested in a July paper that British companies should receive an “expanded” set of so-called enterprise management incentives – tax breaks and subsidies designed to encourage people to start and grow businesses.
But these should “become repayable in part or full if a recipient ultimately chooses to list, or move valuable operations, outside the UK”, it added.
The paper, co-authored with the lobbying consultancy Global Counsel, said the measure could help bolster the London Stock Exchange.
It is not only Arm that has opted against London of late. Betting giant Flutter, building materials company CRH and plumbing firm Ferguson have all left the UK markets for the US in recent years.
However, investors were handed a boon last month when computing firm Raspberry Pi listed on the LSE and saw its valuation skyrocket, in a flotation that bolstered hopes that companies will tap the stock market going forward.
Conor Lawlor, managing director of capital markets and wholesale policy at UK Finance, said: “We want to see UK companies grow and be hugely successful. We also want to bolster our capital markets and the number of companies that choose to list on UK markets. Our aim is to make the UK as attractive a destination as possible.
“We have set out a range of ideas for discussion, including giving enhanced government support to growing companies and also looking at whether that support could incentivise a UK listing.
“Where a UK company chooses to list will of course always be a choice for that individual company.”