UK Starting Business

Although the Big Bang was targeted for the autumn of 1986, it was in fact spread over several years either side of this date. For stock market firms, the fireworks began in 1984 when most of the top brokers and jobbers sold 29 per cent stakes in themselves to banks and investment houses.

Nearer the date, the Americans and others began taking steps to ensure that the old customer loyalties were loosened in their favour. Selling the stock market to the private investor will only happen when the new city operations are running smoothly and it is forecasted that this period will be some time yet as more acquisitions take place during 1988 (potential bidders have deliberately held out on the assumption that stock market members will become cheaper later on).

The Japanese securities giants have been reluctant to acquire whole firms because of the culture problems they fear as a consequence, and they have an uphill struggle to recruit people of quality they need (bar the October crash where labour is now at an abundance).

The three main targets for business will be the corporate investors, existing private investors, and new or novice investors. The last two categories of investor will play an important part in the prosperity of most medium and small firms, but will be profitable only if overheads can be kept down and if the smaller investor can be persuaded to engage in some form of regular savings plan.

The Personal Equity Plan launched in the 1986 Budget may help to ensure a steady flow of business if it can be marketed in the right way.

The fear of many working in the Stock Market is that the Big Bang will be followed by an end to the long, record-breaking bull market; bring about a lethal combination of tougher competition falling demand, as business tails off when share prices look as if they are in for a steady and continuous fall. That would accentuate the gap between the smaller independent firms and the large financial conglomerates.

While the global companies will turn elsewhere in these circumstances, some of the firms locked in to the domestic market may not be able to draw sufficient reserves to weather the storm.

Investors would then be doubly on their guard against increasingly generous savings offers from institutions desperate to hold on to what business they can. This would not be good news for the institution trying to survive in a ‘bear’ market at a time when competition is like never before.