FTSE 100 giants could follow AstraZeneca to New York in blow to London and Treasury

Up to 20 of the FTSE 100’s largest companies could eventually choose a direct listing in New York, according to analysis that has heightened concern over the London Stock Exchange’s fragility and the longer-term health of the Treasury’s tax base.

The warning, drawn up by the LSE and seen by The Sunday Times, suggests the move made by AstraZeneca could, in a worst-case scenario, be replicated by other blue-chip firms with similar share structures. If that happened, it could leave the Exchequer with a £2 billion shortfall in stamp duty receipts from share trading, while inflicting another symbolic and financial setback on the City.

The companies identified as theoretically capable of following AstraZeneca include HSBC, the largest company on the London market, alongside Diageo, BT and Vodafone. Also mentioned are BP, Shell, Pearson and Relx, all of which have American depositary receipts or comparable arrangements that could make a shift to direct US trading more straightforward.

For the LSE, the prospect is unsettling not only because of the immediate revenue implications but because of what it says about London’s ability to retain global champions in an increasingly international market for capital. The exchange is understood to view the analysis as a worst-case scenario rather than a forecast, but it nevertheless reflects a broader anxiety that the capital’s premier market is becoming more vulnerable to decisions taken in boardrooms abroad.

AstraZeneca’s move has become the most closely watched example. The pharmaceutical company, valued at about £220 billion, announced last year that it would “harmonise” trading of its shares between London, New York and Stockholm. In February it replaced the American depositary receipts used to provide US investors with access to its stock with a direct listing on the New York Stock Exchange.

It remains a constituent of the FTSE 100 and continues to keep its headquarters in the UK. Its board has also stressed that the company is still listed in London and remains resident here. Yet the practical consequence of the move is that its London share trading is no longer subject to stamp duty, a change already estimated to have cost the Treasury about £200 million.

The policy significance of that loss is considerable. Stamp duty on shares is charged at 0.5 per cent of the value of a transaction, and for decades it has been one of the City’s most enduring and contested levies. The LSE estimates that if the companies on its watchlist copied AstraZeneca’s approach, the Treasury’s receipts from the tax could fall by £2 billion. That would represent just under half of the £4.3 billion collected in 2024-25.

Such numbers explain why the issue has acquired a political edge. The debate is unfolding against the backdrop of criticism that Labour has failed to generate the pace of growth it promised. Businesses have been vocal about the pressures they face from inflation, higher employer national insurance contributions and a tax environment they regard as increasingly punitive. While GDP has grown moderately under Sir Keir Starmer’s government, the private sector has complained that the cumulative effect of tax rises and tighter reliefs has been to weaken confidence and discourage investment.

Rachel Reeves attempted a partial response in her November Budget by exempting initial public offerings from stamp duty for three years. But she declined to abolish the levy more broadly, despite renewed pressure from City figures who argue that the tax discourages trading in UK companies and makes London less attractive to global investors.

For critics, the danger is not merely that existing listed companies may migrate trading to New York, but that such moves could become more appealing as a first step towards a fuller relocation. AstraZeneca’s decision has fuelled fears of a gradual exodus from London’s financial district, particularly among large multinationals whose shareholder base is already spread across several jurisdictions.

That concern has been sharpened by the wider picture. Several billionaires have already left the UK after the government abolished non-dom tax status last April, closing a regime that had allowed eligible foreign residents to pay UK tax only on income brought into the country. At the same time, there are signs of strain in the market for new listings. The number of companies joining the LSE through IPOs remains subdued, with no flotation worth more than £100 million so far this year, further feeding the sense that London is struggling to compete for both new capital and established names.

The exchange itself has been urging ministers to act. Charlie Walker, the LSE’s deputy chief executive, said addressing barriers such as stamp duty that discourage investment in UK companies would be a “hugely positive step” for retail investors and the wider market, as well as a growth driver for the economy. That language reflects a growing impatience among City institutions, which increasingly argue that the tax is out of step with the realities of modern markets.

Charles Hall, head of research at Peel Hunt, has been among the most outspoken in making the case for reform. He warned of the “clear risk” to stamp duty receipts if more of Britain’s largest companies follow AstraZeneca’s lead in harmonising their listings. He argued that the change makes switching primary listings both easier and more likely, and said the UK could no longer rely on any lingering sense of patriotic duty from companies whose boards and shareholders are increasingly international.

Hall has described stamp duty as “pernicious” and a tax on share trading. His argument has gained traction among those who believe the levy is self-defeating because it discourages the very activity that sustains market liquidity. Some in the City also point out that receipts have already been in decline since peaking in 2000 at £4.7 billion, according to analysis by Peel Hunt. On that reading, the problem is not simply the loss of revenue from any one company, but the broader erosion of London’s competitiveness.

The implications go beyond the exchange itself. If more blue-chip firms were to shift the locus of their trading to New York, the result would be another blow to the UK’s standing as a global financial centre. London has long depended on the presence of multinational companies with deep capital markets and a broad international investor base. The departure of trading activity, even if headquarters remain in Britain, weakens that ecosystem by reducing liquidity, diminishing domestic influence and, over time, potentially encouraging more radical decisions.

AstraZeneca’s case is particularly important because it is not a marginal player but one of the largest quoted companies in Britain. Its move to direct US listing was presented as a technical adjustment aimed at giving it the “flexibility to access the broadest available pool of capital, including in the US”. That formulation was carefully chosen. It allowed the company to insist that it was not abandoning London, while still signalling that the centre of gravity for its investor base was becoming more transatlantic than British.

For ministers, that poses an awkward question. If a company of AstraZeneca’s stature can conclude that New York offers a better trading environment, what is to prevent others from following? The LSE’s analysis does not say they will, but by identifying the firms that share a similar structure, it underlines how much rests on decisions that are not entirely within the government’s control.

The political response is likely to be shaped in part by the emerging ambitions of Andy Burnham, who is positioning himself as an advocate of economic growth with a more interventionist streak. The outgoing mayor of Manchester is preparing to set out his vision next week, including proposals to give regional mayors more control over social housing, welfare and post-16 education. During his campaign for the Makerfield by-election, he suggested cuts to some employers’ national insurance contributions and advocated lower business rates for pubs.

Burnham has described his approach as “business-friendly socialism”, a formulation designed to reconcile public investment with pro-growth economics. His supporters point to Manchester’s 3.1 per cent annual growth over a decade as evidence that a more active local model can deliver results. His rise is significant because it suggests that, within Labour, there is a growing appetite for policies that would ease the burden on employers rather than increase it.

That debate matters because the issue raised by AstraZeneca is not just about one company’s preference for New York. It speaks to a larger strategic problem: whether London can continue to sustain a market in which global businesses see enough value to remain, list and trade here when the alternatives are increasingly compelling. The answer will depend not only on regulation and tax policy but on confidence, scale and the perceived direction of travel in Britain’s economic management.

There is also the question of timing. The LSE’s warning comes as the Treasury is under pressure to balance a difficult fiscal position with claims that Britain needs a more growth-oriented approach. Removing stamp duty altogether would be controversial, not least because the tax is a significant and visible source of revenue. Yet City figures argue that preserving the duty may be more costly in the long run if it accelerates the drift of trading activity overseas and reduces the attractiveness of London as a listing venue.

The risk is that the UK ends up defending a tax that yields diminishing returns while inflicting long-term damage on the market it is meant to regulate. That is the argument now gaining force in the City, where the view is spreading that a policy designed for an earlier era is increasingly mismatched to a market defined by mobile capital and multinational ownership. Whether the government accepts that case remains to be seen, but AstraZeneca’s move has ensured that the issue can no longer be treated as a theoretical one.

For now, London retains its prestige, its legal infrastructure and a deep pool of talent. But prestige alone will not keep large companies anchored if the commercial logic points elsewhere. The concern inside the LSE is that AstraZeneca may prove not an outlier but a precedent. If that proves true, the cost will be measured not only in lost stamp duty but in the slow weakening of one of Britain’s most important economic institutions.