The London Stock Exchange has drawn up a worst-case scenario analysis warning that as many as 20 FTSE 100 companies could shift their direct listings to New York.
The analysis, seen by The Sunday Times, suggests such a mass migration would blow a £2bn hole in the Treasury’s earnings from stamp duty on share trades.
Blue-chip names flagged in the research include HSBC, BT, Vodafone, and drinks giant Diageo, which owns brands including Guinness and Johnnie Walker.
Oil majors BP and Shell, alongside publishers Pearson and Relx, are also identified as carrying similar relocation risk due to their existing American Depositary Receipt arrangements.
The concern stems directly from AstraZeneca’s (AZN) decision to take a direct listing of ordinary shares on the New York Stock Exchange, announced in September last year.
AstraZeneca said the move was aimed at giving it “the flexibility to access the broadest possible available pool of capital,” with the direct listing replacing its existing Nasdaq ADR arrangement from February this year.
The Cambridge-based pharmaceutical giant, currently valued at approximately £200bn, said its goal was to “upgrading” its US listing and “harmonise” the trading of its shares between New York, Stockholm and London.
Critics argued the move effectively downgraded the City’s role as the primary trading venue for AstraZeneca’s shares, with the firm’s London trades no longer liable for stamp duty.
That shift alone is estimated to have already cost the Treasury around £200m, and fears persist that a permanent departure to the United States remains a real possibility.
London’s market charges a 0.5 per cent stamp duty fee on every share purchase, meaning a wave of similar moves by large companies would have severe consequences for public finances.
Investment bank Peel Hunt has argued that scrapping stamp duty entirely would reduce the incentive for companies to consider relocation in the first place.
Charles Hall, Peel Hunt’s head of investment, warned there is “a clear risk” to stamp duty earnings “if more of our largest companies follow AstraZeneca’s lead in harmonising their listing.”
Calls to abolish the levy have grown louder across the City, with investors and market participants arguing it places London at a competitive disadvantage against New York.
A poll from investment platform Interactive Investor conducted in February found that three quarters of investors said abolishing stamp duty on UK shares and trusts would encourage them to invest more.
The debate comes despite AstraZeneca making a surprise U-turn in April, pledging £300m into its UK operations after months of tension with the government over drug pricing.
The company announced plans to revive a £200m investment into a Cambridge megalab and inject a further £100m into its Macclesfield site, marking one of the largest investment commitments in UK drugmaking history.
That domestic investment pledge has done little to settle anxieties in the City about the longer-term structural drift of major UK-listed companies towards American capital markets.