AIM Under Threat? LSE Chief Raises Alarm

The Alternative Investment Market (AIM), London’s junior stock market, is reportedly facing an existential threat, according to London Stock Exchange (LSE) chief Julia Hoggett. Hoggett has issued a stark warning to the government about the potential impact of legislative changes on the future of AIM.

Julia Hoggett, head of the London Stock Exchange, has alerted City minister Tulip Siddiq of grave consequences should the government proceed with plans to hike taxes on shares within AIM in the upcoming budget. Hoggett asserts that eliminating tax relief on AIM shares could jeopardise the very viability of this critical market.

The proposed tax changes have triggered alarm across the financial community with fears that if enacted, as much as 15% of cash could be withdrawn from AIM immediately. Such a significant outflow could precipitate a severe decline in stock values, estimated to be between 20-30%.

Acknowledged for its essential role in the British economy, AIM adds approximately £35.7 billion to the UK's GDP, underpins over 410,000 jobs, and makes a substantial contribution to corporation tax revenue. Hoggett emphasises that AIM is more than a market; it's a vital part of the country's financial infrastructure that nurtures small to medium-sized growth businesses by connecting them with much-needed risk equity capital. She warns that in the absence of tax-relief measures, investment trends might gravitate towards larger, established firms to the detriment of smaller, innovative companies.

Central to Hoggett’s concerns is the potential removal of business relief (BR) on shares traded on AIM. Such a move, she argues, would not only weaken the market’s capital foundation but would also send negative signals about the government's commitment to nurturing small-scale enterprise.

The London Stock Exchange chief's challenge to the proposed legislation reflects a broader anxiety about the future of risk capital markets and the broader landscape for growing companies in the UK. Without the current tax incentives, the competitiveness of the British economy could suffer, particularly in sectors dependent on continuous investment to innovate and expand.