Ken Mahoney
Connor Mahoney
The old adage is that the US Innovates, China Replicates, and Europe Regulates. That trend will now continue with the results from the most recent election in England.
The top 3 stocks by market cap on the London exchange are Astrazenaca (242B), Shell (228B) and Linde (209B). Comparatively, Apple just crossed 3.5T in market cap, as well as Microsoft and Nvidia being in the 3T range.
Of course, the US is home to Google, Amazon and many others that are far greater in value then any of the top 3 in the UK. With that, the top 3 most valuable US companies are more then 10x the value of their top 3. It really is comparing apples to oranges when looking at the US and London stock markets.
This is highly unlikely to ever change, especially since the labor party in the UK is taking over. Many critics cited that the labor party manifesto was aspirational but really laid out no plan when it comes to specific tax and spending measures.
The IMF noted certain funding gaps for England for different public services that wouldn’t be met without raising taxes. It seems a lot of the growth of their economy is dependent on government spending from what we are seeing.
Chancelor Reeves criticized this in saying that “its not going to be the government that is going to create jobs and the prosperity and the investment” which we know to be true here in the U.S. Jobs are created by companies and not the government directly.
In England, and in Europe in general, when you have a successful company that takes more market share, the reward is immediately get hit with anti trust and stifle the growth. Companies are coming to the US because of this, and more companies are staying or going private since its really hard to increase that market share and put efforts into it, knowing full well you will end up being scrutinized by regulations.
Reading through some of the other plans, they quietly will most likely be even further raising taxes to businesses and individuals, and that will also stifle growth and certainly doesn’t attract much talent to businesses.
With the socialist backdrop, really everyone there is pretty much handcuffed financially by the government and with the labor party coming in that will only continue. Taxes for individuals are already 40% for anyone making 50-125K and up to 45% over 125K.
Essentially, this move in England is another shift towards even bigger government that does not reward innovation. They will continue to be stuck in the mud because their entire system really has socialism written all over it and we know how those economies have fared in the past. Businesses and individuals generally stay suppressed and under regulations.
It really is telling why their stock exchange is so much smaller and less lucrative then here in the US, and unfortunately for those who are excited for change in England are just going to be met with the same mess that they have been running into.