Brexit Hit Britain's Capital-Raising, Not Its Headline Markets
- Leeds Policy Institute
- 18 hours ago
- 3 min read
2026 report finds the FTSE 100's post-Brexit rebound masks a constrained listing and dealmaking environment, and calls for stronger domestic demand for UK equities and faster FSMA listing reform.
Leeds, July 2026 — Drawing on Bloomberg Terminal datasets spanning 2010 to 2025, this Leeds Policy Institute (LPI) report compares the market performance and capital-raising activity of UK-listed firms against counterparts in France, Germany, and the Netherlands. Using a moving-average time-series model across pre-Brexit, transition, and post-implementation phases, the study isolates Brexit-specific effects on equity performance, IPO activity, and mergers and acquisitions, and asks whether the regulatory autonomy granted by the Financial Services and Markets Act has begun to offset the frictions Brexit introduced.
“While the FTSE 100 rebounded strongly after the UK's formal exit, this resilience reflected the strength of large, internationally diversified firms rather than a broad-based improvement in domestic market competitiveness.”
Key Findings:
A Headline Rebound With Narrow Roots: The FTSE 100 rose 74% following the UK's formal exit in 2021, but the gains were concentrated in large, internationally diversified firms. A weaker pound lifted overseas earnings in sterling terms, while higher rates and elevated commodity prices favoured energy and financial stocks, rather than reflecting a broad recovery in domestic market strength.
A Constrained Listing Market: IPO activity stayed weak across the post-Brexit period, with only 12 listings on the UK main market in the year to October 2025. The moving-average model shows post-Brexit listing volumes inflated by a backlog of firms that had delayed flotation through the years of negotiation uncertainty, not by a durable recovery in issuer confidence.
Declining Deal Counts: M&A deal count fell 18.96% over the transition period, from 596 in early 2016 to 483 by its close, and continued to underperform EU peers. Deal value held up far better than deal count, since sterling depreciation (GBP/EUR moving from €1.30 to €1.10, GBP/USD from $1.48 to $1.21) made UK assets roughly a fifth cheaper for foreign acquirers.
Regulatory Autonomy Not Yet Delivering: The Financial Services and Markets Act 2023 has yet to offset Brexit-related frictions in corporate finance, with slow implementation limiting its impact. Amsterdam overtook London as Europe's largest equity-trading venue from 2021, illustrating how regulatory divergence reshaped where market activity sits.
Policy Recommendations:
Strengthen Domestic Institutional Demand for UK Equities: HM Treasury and the FCA should expand incentives for long-term investment in UK-listed firms by easing solvency constraints, scaling up Long-Term Asset Funds, and introducing targeted tax incentives for UK equity holdings. Deeper domestic demand would improve liquidity, support valuations, and strengthen London's appeal as a listing venue.
Accelerate FSMA-Based Listing Reform and Regulatory Clarity: The FCA should expedite simplified listing requirements, reduce disclosure burdens for growth firms, and give clear guidance on dual-class share structures. Faster, more predictable rulemaking would lower listing costs and improve confidence among issuers weighing London against EU alternatives.
Taken together, these measures would help restore the UK's capital-raising capacity and convert the legal flexibility of post-Brexit reform into a measurable improvement in market participation, reinforcing London's position as a leading global financial hub.
About Leeds Policy Institute
Leeds Policy Institute (LPI) is the UK's first student-run policy unit and think tank based at the University of Leeds. Since its founding in April 2023, LPI has brought together over 100 undergraduate and postgraduate students across a wide range of disciplines to produce evidence-based, non-partisan research. All research outputs undergo rigorous internal review and are evaluated by the Academic Advisory Council. In its third year of operations, LPI members have presented at the British Conference of Undergraduate Research in London (LSE), Newcastle, and Glasgow, and have seen their work featured on national platforms including the Financial Times.
Media Contact:
Anatoly Safiulov
President, Leeds Policy Institute
+44 7849 891757
Notes to Editors:
The full policy paper is available upon request.
The paper compares UK market performance, IPO activity, and M&A against France, Germany, and the Netherlands across pre-Brexit, transition, and post-implementation phases.
The analysis uses a moving-average time-series model applied to Bloomberg Terminal datasets covering 2010 to 2025, with the three EU markets serving as counterfactual comparators.
The LPI is based at the University of Leeds and produces independent, evidence-led research to inform UK policy.
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