Catalysts for growth: Boosting UK growth markets

UK Growth markets play a vital role in driving economic growth. They provide companies with access to the funding they need to scale, innovate, and create jobs. They enable individuals and pension funds to put their savings to work in some of the most pioneering companies in the UK. By creating a platform for businesses to raise capital, the markets enable investment in sectors that contribute to the country’s overall prosperity. They provide a home to over 700 companies across the country enabling them to turn ideas into products, services and jobs.

Despite this, many UK companies are seeking growth opportunities abroad due to challenges such as market volatility and liquidity concerns. To retain their value, innovation, and economic contribution, it's crucial to view growth markets as a source of national strength.

As the UK’s revolutionary listing regime changes start to have an impact, and a pipeline of UK-based companies are moving through their maturity cycles, there is an opportunity build on UK's growth markets' competitiveness and boost their contribution to the government's growth mission.

With the approaching 30th anniversary of the Alternative Investment Market (AIM) we set out 10 strategic enablers to strengthen these markets and ensure they contribute to the nation's wider economic goals.

What are growth markets and growth companies?

Growth companies are those companies which have the potential to experience significant and rapid increases in revenue, profits, or market capitalisation, often outpacing industry peers and the overall economy.
Growth markets in the UK, such as the AIM and Aquis Growth Market, typically attract smaller, high-growth companies seeking to raise capital. While they are public markets, like the Main Market on the London Stock Exchange, company’s shares are ‘admitted’ directly to them rather than needing to be ‘listed’ by the FCA and so are subject to a slightly different regulatory regime, tailored to meet the needs of growing companies.

Why do equity markets matter?

Equity is an important form of longer-term funding for companies, enabling them to finance expansion projects such as research and development (R&D) and contribute to growth and innovation across the economy. Equity allows companies to share the risk inherent in any new venture, leading to more stable and resilient businesses. Equity markets, both public and private, offer a wide range of investment options, allowing investors to diversify their portfolios and opening the potential for higher returns.

Why do public markets matter?

Public markets offer mature companies opportunities for capital generation, visibility, and liquidity. They democratise investment access, provide quick share trading, and support economic stability. Public markets give companies a sense of place, helping them to build visibility and cement ties in the country in which they choose to list. The companies that go public on these markets in the UK make a real contribution to the economy—directly through the value of goods, services and job creation, and indirectly through supply chains and employees’ wages spent on goods and services supplied by UK businesses.

In 2023, AIM companies contributed £35.7bn GVA to UK GDP and directly supported more than 410,000 jobs.

Approximately 25% of shares held on AIM are held by retail investors compared to 10% on the Main Market

AIM companies made a corporation tax contribution of £5.4bn to the Exchequer in 2023.

AIM companies are, on average, more productive than the national average with productivity of £87,100 GVA per employee

What are UK growth markets and why do they matter?

UK growth markets like the AIM and Aquis are vital for supporting diverse companies across the UK, helping them raise funds and engage with larger firms. Most new admissions are UK-incorporated companies. These markets offer investment opportunities in innovative companies, supporting regional economies and government growth plans. They provide regulated protection and play a crucial role in reducing regional disparities and attracting overseas revenue.

Strategic enablers for the UK’s growth markets: We recommend that government and regulators work with UK growth markets and the industry to deliver action in the following areas, to maximise this potential and drive growth across the economy.

1. Establish a growth markets industry group
2. Extend support programmes for scaling businesses
3. Apply a growth market lens to regulation
4. Rethink marketing rules
5. Remove barriers that reduce liquidity in the markets
6. Review asset management reporting requirements
7. Boost institutional investment into UK growth markets
8. Set out a clear strategy for retail participation
9. Be a world-leader in the development of tools to innovate and digitise UK markets
10. Encourage catalytic capital to remain in the UK

Catalysts for growth: Boosting UK growth markets

What are growth markets and growth companies?

Why do equity markets matter?

Why do public markets matter?

What are UK growth markets and why do they matter?

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