In a bid to invigorate the British economy, Lisa Gordon, the chair of investment bank Cavendish, has put forward a bold proposal: impose taxes on cryptocurrency purchases while scrapping stamp duty on stock transactions. This, she argues, would encourage more citizens to invest in local equities, fostering business growth and economic stability.
Gordon’s concerns stem from what she sees as a troubling trend among younger investors. “It should terrify all of us that over half of under-45s own crypto and no equities,” she stated in a report by The Times on March 23. She believes that by removing the 0.5% stamp duty on shares listed on the London Stock Exchange – a levy that currently generates approximately £3 billion ($3.9 billion) annually – the government could create a more attractive environment for stock investing. Redirecting this tax burden to crypto purchases could, in her view, steer capital toward businesses that contribute directly to the economy.
To Gordon, cryptocurrencies represent a stark contrast to equities. She categorized them as “a non-productive asset” that fails to benefit the wider economy. Shares, on the other hand, play a pivotal role in driving economic progress by channeling funds into businesses that employ workers, innovate, and pay corporate taxes. “That is a social contract,” she emphasized, highlighting the fundamental difference between investing in stocks and speculating in crypto.
A Shift in Investment Behaviour
The increasing prevalence of cryptocurrencies among UK investors is evident in statistics from the Financial Conduct Authority (FCA). In November, the regulatory body reported that crypto ownership had reached 12% of the adult population, equating to around seven million people. Notably, 36% of these investors were under 55. Gordon expressed concern over this shift, pointing out that a larger portion of the population had migrated toward saving rather than investing—a strategy she warned is “not going to fund a viable retirement.”
Insights from a 2022 FCA survey reaffirm this concern. Findings revealed that approximately 70% of adults held a savings account, while only 38% had direct or indirect stock investments. Particularly among younger adults, investing remained an uncommon practice, nearly three in four people aged 18 to 24 had no investments at all. More alarmingly, the ongoing cost of living crisis has exacerbated these trends. According to a follow-up FCA survey, conducted in the 12 months leading to January 2024, economic challenges forced 44% of UK adults to either reduce or halt their saving and investing activities, while nearly a quarter had to dip into their savings or liquidate investments just to cover everyday expenses.
The Decline of London’s Stock Market
Gordon’s argument ties into broader concerns surrounding the state of the UK’s financial markets. As a member of the Capital Markets Industry Taskforce, a group dedicated to revitalizing the country’s investment landscape,she is acutely aware of the challenges facing the London Stock Exchange. Consulting firm EY highlighted these issues in a January report, describing 2023 as “one of the quietest years on record” for the stock market. Only 18 companies went public last year, a decline from 23 in 2022. Meanwhile, capital flight continued as 88 companies either delisted or moved to foreign exchanges, often citing “declining liquidity and lower valuations compared to other markets,” particularly the US, as the primary reasons for their departure.
Comparing Economic Conditions: UK vs. US
Despite these setbacks, Gordon maintains that the UK presents a relatively stable investment environment. She characterized the nation as a “safe haven” in contrast to the turbulence of the US stock market, which has seen trillions of dollars in losses due to economic uncertainty stemming from former President Donald Trump’s tariff policies and fears of a looming recession. Meanwhile, the cryptocurrency market has mirrored the struggles of traditional equities, with Bitcoin experiencing an 11% decline over the past 30 days. Despite a brief recovery in the past 24 hours – trading at approximately $85,640 – Bitcoin has struggled to maintain support above $85,000 since early March.
A Call for Policy Change
Gordon’s proposal ultimately hinges on a fundamental question: where should the focus of investment be directed to ensure long-term economic stability? By making stock investments more attractive through tax incentives and discouraging speculative crypto purchases with a levy, she believes the UK can reinvigorate its capital markets while ensuring that individuals contribute to economic growth in a meaningful way. Whether the government will take up this recommendation remains to be seen, but her vision underscores a pressing need for policies that realign investment strategies with the nation’s broader financial health.
