LONDON has lost its crown as Europe’s largest stock market to Paris, with France closing a trillion-dollar market gap since the 2016 Brexit vote.
An index compiled by Bloomberg has shown that the combined market capitalisation of primary listings in Paris was greater in value than London’s in terms of US dollars.
Recent currency movements have been to France’s advantage as former prime minister Liz Truss’s ill-fated September mini-Budget of tax cuts sank the pound to its lowest-ever value against the US dollar and caused chaos for the UK economy.
Meanwhile, domestically focused UK shares have slumped while French luxury brands have had a boost over the potential easing of China’s "zero Covid" policy – the country’s bid to completely eradicate the virus.
It has also been reported that UK midcaps - companies valued between £2 billion and £10bn - have also been hit hard by predictions that the UK public would be squeezed harder by inflation than elsewhere.
The shattering of confidence in the British market came within three weeks of Truss getting the keys to No 10, with the UK’s stock and bonds market losing around £500bn in combined value.
The market cap gap between France and the UK has been narrowing since the 2016 Brexit referendum, when it stood at around $1.5 trillion.
It is estimated that British equities are now worth around $2.821tn, with French equities thought to be worth about $2.823tn.
Meanwhile, former Bank of England policymaker Michael Saunders has recently said that the UK economy has been “permanently damaged by Brexit" and that it has "reduced the economy’s potential output significantly" and "eroded business investment.”
He added: “If we hadn’t had Brexit we probably wouldn’t be talking about an austerity Budget this week – the need for tax rises and spending cuts wouldn’t be there if Brexit hadn’t reduced the economy’s potential output so much.”
Alison Thewliss, the SNP's shadow chancellor, said the damage to the UK economy showed that "Brexit doesn't work".
She added: “It has been nothing short of an unmitigated disaster – an act of economic self-sabotage which experts are warning has permanently damaged the UK economy and is playing a major part in the new era of austerity being ushered in by the Tory government.
“As the cost-of-living crisis deepens and people struggle to make ends meet, the reality is that the Tory government is pouring more fuel on the fire with its extreme Brexit agenda which is hammering the economy, punishing businesses and hitting trade.”
The UK Government was approached for comment.
