This June, the British financial firm Wise, with a market capitalization of £10 billion, announced that it plans to move its primary stock-market listing to the U.S. It’s only the latest in a long series of major U.K. companies opting for America. The chip designer Arm Holdings, once based in Cambridge, moved its listing to NASDAQ in New York in 2023, ignoring the pleadings of the British government to stay put. They wouldn’t even keep a secondary listing in London.
But it’s not just London losing out. Stockholm has also lost a string of successful companies to New York. In 2018, the music-streaming platform Spotify made the move; now, it’s the driverless-truck start-up Einride; and the fintech company Klarna is exploring its options in the U.S.. “Should it be a natural law that European tech companies almost exclusively go to U.S. stock markets to go public?” the Swedish Prime Minister Ulf Kristersson asked the Financial Times.
Why are they leaving?
Philippe Aghion is a professor of economics at the Collège de France, INSEAD, and the London School of Economics. Aghion says successful start-ups are facing a number of barriers to growth in Europe. The capital markets can’t rival what’s on offer in the United States, so even though there are plenty of innovative small-and medium-sized enterprises in Europe, they often look to New York to explore their initial public offerings. And it’s not only a lack of capital that’s pushing them westward; there’s also an excess of regulation.
But European policy makers have started to take notice of what’s happening. They’re trying to create a more integrated capital-markets union, strengthen European venture capital, boost basic research funding, and much besides. Still, Aghion says, there isn’t enough happening—and it isn’t happening fast enough: The European Union is too fractured to move with great speed. And so it’ll be up to vanguard countries to go it on their own, leaving Brussels behind …
Gustav Jönsson: What kinds of companies do you see leaving Europe?
Lukas Kyzur
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