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Speaker 1: Take the example of the United States population thirty five

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Speaker 1: percent smaller than Europe GDP economy thirty five percent bigger,

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Speaker 1: but equity markets ten times more liquid than the UK

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Speaker 1: and Europe put together. So where does that come from?

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Speaker 1: And I think it's good to be thinking about it.

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Speaker 1: There's obviously again a new process that is started. Can

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Speaker 1: we modify this rule or that rule. But fundamentally, you

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Speaker 1: have a corporate funding environment that to the tune of

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Speaker 1: more than eighty five percent, And the UK is in

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Speaker 1: the same position as the rest of EU, as Europe

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Speaker 1: is funded by bank lending, whereas the US funds its

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Speaker 1: economy to the tune of eighty five percent from capital markets,

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Speaker 1: mostly equities and arranged by the capital instruments, but only

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Speaker 1: fifteen percent comes from bank lending. And it's the fundamental

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Speaker 1: difference in approach where the UK and Europe have an

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Speaker 1: economy funded mostly by debt, a downside focus bankruptcy, focus

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Speaker 1: protection guarantees, focus funding environment, and where regulation and even

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Speaker 1: more importantly fiscal policies subsidizes debt heavily but punishes equities.

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Speaker 1: And it's that whole difference in culture that has been

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Speaker 1: induced by many decades of fiscal and regulatory policy that

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Speaker 1: has created the difference, and I think we're today at

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Speaker 1: a point where some pretty thoughtful, radical reform is needed.

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Speaker 1: There's no shortage of innovation, great academic institutions, technological entrepreneurial spirit, capital,

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Speaker 1: all the ingredients are there, except for the fact that

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Speaker 1: we can't scale them up. And you can't scale up

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Speaker 1: the industries of the future, particularly tech, without far deeper

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Speaker 1: equity markets.

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Speaker 2: So then why is government not listening, not taking that advice?

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Speaker 2: Why are they not going to be Edinburgh full?

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Speaker 1: It drives essentially down to one element, which is in

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Speaker 1: the ukn Europe, policy makers to control the distribution of

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Speaker 1: capital to the corporate sector influence it. If you have

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Speaker 1: a very oligopolistic, very concentrated banking industry dependent for its regulation,

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Speaker 1: for its capital ratios on the central bank, there for

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Speaker 1: the government, you're essentially of a government which is at

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Speaker 1: the heart of a capital distribution system where it's not

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Speaker 1: investors that make the decision on which technology is going

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Speaker 1: to be scaled up. Ultimately it has to go to

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Speaker 1: the banking sector.

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Speaker 2: While did you think that the conversation in the UK

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Speaker 2: specifically has reached this crescendo point. Why is it now

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Speaker 2: that you know we hear much more from business about

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Speaker 2: this now about the possibility of chay.

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Speaker 1: Because I believe that the UK has a lot more

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Speaker 1: to lose than the rest of Europe. London was an

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Speaker 1: undisputed global financial hub, a leader, if not the number

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Speaker 1: one in my opinion, it was number one in many areas.

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Speaker 1: And we're now seeing in some areas some of that

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Speaker 1: leadership being frittered away, going away, and those are the numbers.

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Speaker 1: This is not a political debate, this is a technical debate.

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Speaker 1: So there are those who are part of building that

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Speaker 1: global leadership, building the global compression engine and interest rates

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Speaker 1: to what Clearing at the London Clearinghouse was not an

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Speaker 1: easy thing to do. This goes back to twenty fifteen

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Speaker 1: and sixteen. LCCH became the biggest clearing house in the world,

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Speaker 1: the biggest financial complex. And when you see those advantages

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Speaker 1: being frittered away, a lot of the folks that work

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Speaker 1: incredibly hard to secure this advantage, some of them start

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Speaker 1: speaking out.

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Speaker 2: The fifty billion pound fund for investment, the Lord Meth

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Speaker 2: the City of London, Nicholas Lines proposed it, Labor had

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Speaker 2: backed it. There is this idea that this money would

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Speaker 2: take pension fund investment cash and then push it towards

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Speaker 2: growth businesses. It seems to have some backing. Others are

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Speaker 2: quite critical. Again, is that tinkering in terms of opinions.

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Speaker 1: They're plentiful and they're cheap. But US equity markets trade

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Speaker 1: seven hundred billion dollars every day. The whole of the

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Speaker 1: UK and Europe trade seventy billion, So there is no

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Speaker 1: lack of capital in Europe. There is no lack of

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Speaker 1: great technologies. The UKs some of the most fantastic universities

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Speaker 1: in the world. As a great deal of entrepreneurial spirit.

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Speaker 1: There is no problem with the startup economy, but we're

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Speaker 1: not freeing, unleashing the full power of equity markets. And

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Speaker 1: equity markets are essentially private investors, institutional investors, pension funds,

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Speaker 1: insurance companies making the bets for the future, for future growth.

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Speaker 1: That is the power that we risk eschewing. If we

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Speaker 1: look at government driven solutions, where public money again gets

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Speaker 1: in a fairly minor fashion ere marked to fund technology,

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Speaker 1: it's not the way this works.