Brexit 'idiocy' blamed for London stock market contraction

Herman Hauser says 'New York is a much deeper market than London' Photo: Chris Williamson/Getty Images.

Brexit 'idiocy' is to blame for London's stock market contraction, says Arm founder.

Hermann Hauser, one of the founders of the British microchip giant, said the company has been dismissive of Britain because of its unfavorable listing in part because of the damage done to the London market by leaving the EU.

Mr Hauser, who is no longer associated with Arm, said: “New York is a much deeper market than London and … due to the idiocy of Brexit, of course, the image of the London Stock Exchange has suffered greatly in the international community.”

Speaking on BBC Radio 4's Today programme, Mr Hauser said the ability to raise large sums of money on the London Stock Exchange (LSE) has been limited since the UK left the EU. He said Arm had failed to raise the $10bn (£8bn) it had hoped to raise in the London market.

The company whose microchip designs are used in billions of smartphones and other devices was registered in London . between 1998 and 2016 when it was bought by SoftBank for £24bn.

Then-Prime Minister Theresa May hailed the deal as a «vote of confidence» in Britain's Brexit. SoftBank CEO Masayoshi Son said he was «one of the first to bet big on the UK after Brexit.»

The Japanese conglomerate is currently looking to get rid of Arm. The Cambridge-headquartered company is trying to raise about $10 billion through a listing at a valuation of between $30 billion and $70 billion, making it one of the largest listings on the stock market this year.

In March, Arm announced it was avoiding the LSE in favor of the US, rejecting advances by Rishi Sunak to list shares in the UK.

Arm's decision came as a blow to government efforts to encourage more fast-growing companies to list their shares in London

It also heightened concerns about the state of the LSE after several companies left the market in favor of New York. Irish construction giant CRH is moving its main listing to the US, while owner Paddy Power Flutter is considering listing in New York.

Mr. Sunak has repeatedly lobbied for Arm's London listing, either as its main market or double listing. Officials have reportedly proposed changing the listing rules to attract the company.

Mr Hauser said there is still a lot of support for Arm in the city, so it would make sense for Arm to have a secondary company. listing on the LSE at some point in the future.

He added: “The problem is that IPO on two exchanges at the same time is a huge amount of work, so the administrative effort is doubled.”