by Stephen Tall on October 17, 2009
A story we didn’t get the chance to cover this week was Nick Clegg’s speech to the National Liberal Club in which he gave his personal backing to an idea being developed by Lib Dem shadow business secretary John Thurso – the potential for a system of localised stock markets across Britain:
Regional stock exchanges are one way of getting vital investment directly to small and medium-sized businesses. They could give local investors – many of whom are disillusioned with the City – an opportunity to see business grow and keep jobs in their communities.
“Too many are struggling and many viable start-ups just cannot secure the finance they need. We simply can’t rely on wheeler-dealing in London’s Square Mile to keep the country afloat. It’s high time we look at innovative ways to spread growth across the country.”
Well, the idea has found early and firm favour in Wales, where the party’s economic spoksesperson Jenny Randerson has declared her support for the idea:
John Thurso, the Liberal Democrat Shadow Business Secretary, has for some time been investigating the potential for a system of localised stock markets across the United Kingdom. This is something that Wales needs to look at as a matter of urgency.
Until the 1970s, there were a number of successful “local” stock exchanges across the UK, but as the fashions of business gravitated towards big companies and away from smaller firms, these fell by the wayside. … I believe that a Welsh Stock Exchange has the potential to be far more successful, as it is more likely to tap in to thousands of people who have never played the markets but would love to invest relatively modest amounts in businesses that are close to their homes and communities.
Wales only has one FTSE 100 business and 99% of Welsh businesses are SMEs, many of whom would relish the opportunity to seek out private capital in this way. Most small firms cannot afford the costs associated with listing themselves on even the junior partners to the London Stock Exchange.
A Welsh Stock Exchange could re-create a link between local capital and local businesses, provide huge potential for small and medium sized Welsh firms to raise capital and act as stepping stones to bigger markets.
There are obviously lots of issues that need careful consideration: what the set-up expense would be, what role the Welsh and UK Governments would need to play in facilitating the development, and how any organisation would fit into current UK and international markets, but if this week has proved anything, it is that we need bold and radical ideas to transform our economy.
There will be some in politics who will dismiss this idea without even considering it. But they are usually the people who continue to hold the Welsh economy in the crippled mess it is in now.
In the coming months, I will be arguing that the Welsh Assembly Government needs to look at this proposal, in consultation with Welsh business, and examine its viability.
There are considerable hurdles to overcome, not least the fact that any scheme would need the approval of the FSA. But business and government may find that such an idea has the potential to transform the Welsh economy, and play a part in creating the conditions that Welsh businesses have been crying out for.
You can read Jenny’s article in full here.