Crypto obsession in the UK could be a threat to financial growth

Lisa Gordon, chair of the investment bank Cavendish, believes it is alarming how popular cryptocurrency investing has become among the UK population. She emphasises that over half of Britons under the age of 45 are now investing in cryptocurrencies rather than equities, describing the trend as “terrifying”. Gordon argues that this behaviour could harm the economy, as cryptocurrencies are unregulated and classed as non-productive assets.

She believes encouraging people to invest more in equities would boost the economy by injecting capital into businesses. Shares, unlike crypto assets, provide growth capital to companies which in turn create jobs, pay taxes, and contribute to innovation. Gordon highlights the role of the social contract supported by equity markets, which links public investors to corporate growth and economic stability.

To revive equity investing in the UK, Gordon suggests cutting the 0.5 per cent stamp duty currently applied to stock market trades. However, she also advocates introducing a similar tax on cryptocurrency transactions to regain revenue lost by such a measure, as stamp duty on shares contributes over £3 billion annually to the Treasury.

Discussing financial literacy, she stresses the importance of educating the public on equity investing, which in her view would prepare people for retirement more effectively than cash savings accounts. Gordon references her own early investment in British Gas shares during her student years as an example of how accessible and impactful equity investing can be. She notes the distinction between saving, which focuses on preservation, and investing, which drives growth.

Gordon sees the pension industry as a powerful solution for strengthening the London Stock Exchange. She points to the Mansion House Compact, which encourages pension funds to invest 5 per cent of assets into unlisted firms, unlocking an estimated £100 billion in capital. She suggests extending this concept to include companies listed on AIM, creating a ripple effect of funding across the market.

The broader issue lies in the declining participation of domestic investors in the UK stock market. While the proportion of London-listed shares owned by British investors has fallen from 80 per cent in the 1980s to 35 per cent today, Gordon remains optimistic. She describes London as a financial “safe haven”, especially in comparison to volatile global markets. Her hope is that renewed interest in equity markets will reverse capital outflows and lead to a resurgence in domestic investment.

Ultimately, Gordon’s advocacy highlights the pressing need to reform how the UK approaches personal and institutional investing. Strengthening equity markets, she asserts, is essential for economic growth, job creation, and long-term stability.