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The bull case for beaten-up Britain
One of the vices of Britons is a penchant for mourning the country's decline. To be cured of this, Britain would probably need a different history. It was the first industrial nation. From that starting-point, its influence could only ever go in one direction: downwards. There is a large literature blaming long-term decline on sloth, complacency and amateurism. Brexit is just another opportunity to lament lost relevance.
This sense of decline is felt keenly in capital markets. Sterling was once the global currency but it now accounts for less than 5% of foreign-exchange reserves. Britain's money markets used to stand out in Europe for their high interest rates; but no longer. And Britain's stockmarket is a shadow of its former self. Big IPOS are as rare as rocking-horse dung. This scarcity along with years of share underperformance has seen Britain's share of global market capitalisation shrink markedly.
So accepted has the narrative of decline become, that it is probably time to bet the other way. The economy is poised for a sharp recovery. London's bourse is stuffed with the shares of companies—miners, banks and energy firms—that ought to do well in an environment of rising inflation. And though fixing the structural deficiencies of Britain's capital markets is a big task, it is not impossible.
On cyclical grounds, there is a strong case for Britain. The immediate outlook for the economy is rosier than almost anywhere. That in part reflects the ground lost to covid-19. The Bank of England reckons that, even after a surge in activity this quarter, GDP will still be around 5% below its pre-pandemic level. But it is also because the vaccine roll-out has been impressively quick. There is a sense, too, that uncertainty is diminishing. Brexit is done. The world has kept turning. And politics is more stable. Even if a fight over Scottish, and possibly Northern Irish, independence still looms, the ruling Conservatives enjoy a handsome majority in parliament.
The FTSE All-Share index is heavy with the kind of cyclical stocks that have been in favour recently. But, lamentably, it is light on the digital champions of tomorrow. This is not for lack of innovation. Britain is rather good at fostering startups. There are various tax breaks to help fledgling companies raise seed capital. Universities have grasped that business spin-offs are to be encouraged, says Anne Glover of Amadeus Capital Partners, a venture-capital firm. Britain has four in the top ranks: Oxford, Cambridge, Imperial College and University College, London.
富时全股指数中充斥着最近备受青睐的周期性股票。但令人遗憾的是，未来的数字领军企业还没有出现。并不是因为缺乏创新，英国非常擅长培育创业公司，有各种各样的税收减免来帮助羽翼未丰的公司筹集种子资本。风险投资公司Amadeus Capital Partners的安妮·格洛弗表示，大学已经意识到，商业剥离将受到鼓励。英国有4所顶尖大学：牛津大学、剑桥大学、帝国理工学院和伦敦大学学院。