A new report by two influential think tanks has called for the abolition of London’s junior stock market, Aim, as part of a strategy to revitalise the UK capital market and attract high-growth technology firms.
Established in 1995, Aim was designed to enable young companies to list and raise capital with fewer restrictions than a full London Stock Exchange (LSE) listing. However, the report, jointly authored by the Tony Blair Institute for Global Change and the centre-right think tank Onward, argues that Aim has failed to live up to its original purpose.
According to the report, which was published in the Times, Aim is ‘not fit for purpose’ in helping promising tech companies secure scale-up capital. Instead, it recommends merging Aim with the main LSE, allowing companies to benefit from a fast-track listing category. This would give firms the flexibility to retain the tax perks currently enjoyed by Aim stocks while gaining the exposure and support offered by the main exchange. The proposal forms part of a wider set of reforms aimed at attracting and retaining tech companies in London, amid increasing competition from global markets like the US.
In addition to merging Aim with the LSE, the report suggests creating a £1 billion publicly funded growth capital fund to support late-stage venture capital. This would help bridge the gap for businesses that require significant investment but are not yet ready for flotation. The report also calls for governance reforms, including easing restrictions on executive pay rises and providing subsidies for City analysts to cover smaller companies, many of which suffer from a lack of visibility.
Although Aim has seen success stories, such as Jet2 and Fevertree Drinks, it has also been plagued by poor returns for investors, low liquidity, and even instances of fraud. Analyst coverage for most Aim stocks has been virtually non-existent, and the market has struggled to provide sufficient growth opportunities for fast-moving tech firms. Despite this, the LSE has defended Aim, calling it one of the world’s most successful markets for dynamic high-growth companies and a crucial part of London’s financial ecosystem.
However, the think tanks have warned that without bold reform, London risks losing its competitive edge in attracting world-leading innovations. With global markets moving swiftly, the UK must adapt to ensure it remains a hub for tech talent and investment. The report suggests that if changes are not made soon, the UK could see its brightest tech prospects lured elsewhere.