London recently lost its position to Paris as the biggest stock market in Europe. Meanwhile, concerns about the UK’s recession are increasing among British firms. London's lost position has resulted in the value of the listed stocks & the market capitalization on the Paris Stock Exchange being higher than those on the London Stock Exchange. The combined London’s market capitalization on the Stock Exchange, hitherto to Wall Street’s outside exchange, is about $2.821trillion. On the other hand, the Paris-listed shares are worth $2.83 trillion.
Stakeholders feel that if Britain's economy continues to struggle, the alteration that appears marginal now may widen further. Generally, the former most valuable stock exchange lost its position after investors released UK firms’ stocks, fearing the economy would fall into a recession. Financial experts define a recession as two sequential quarters of a country’s natural GDP decline. The UK economy had faced challenges since 2016, when it withdrew from the EU.
Besides, Russia's invasion of Ukraine and the Covid-19 pandemic worsened the situation. The stress could only worsen following former Prime Minister Liz Truss's announcement of the September mini-budget. Her report resulted in a rise in the benchmark interest rate and turmoil in the stock market for Britain’s government. Between July and September, the UK GDP (gross domestic product) surged by 0.2%. Analysts concluded that current stock market sentiment reflects the ongoing economic pressure.
The MPC (Monetary Policy Committee) of the Bank of England has projected that the UK GDP might fall throughout the following two years. In any case, tighter financial terms and high energy prices impact spending. The bank raised the borrowing cost by 0.75 basis points several times in a row. This shift marked the most since 1989, resulting in a recession. Recent data indicates the consumer price index increased by 10.1% in September and 11.1% in October.
Britain is struggling with a severe inflation crisis with soaring energy prices after Russia invaded Ukraine. The high fuel demand impacted post-Covid-19 recovery, and the invasion meant less supply. For that reason, food prices have incredibly increased and worsened the inflation crisis. Financial experts believe the reason for France overtaking the UK is due to the bounce-back in the demand of Chinese shoppers for French luxury goods.
These purchases have boosted French luxury shares. The latest reports show that France is developing at a small pace and might also fall into a recession. Above all, the central bank of France's monthly data indicated that activity progressed in October in both services and industry. International firms that make up the significant exchange value may shift their investments elsewhere. The future depends more on the UK retaining its professional services edge in attracting international firms and raising money to list in London.
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