Take the example of the United States population thirty five percent smaller than Europe GDP economy thirty five percent bigger, but equity markets ten times more liquid than the UK and Europe put together. So where does that come from? And I think it's good to be thinking about it. There's obviously again a new process that is started. Can
we modify this rule or that rule. But fundamentally, you have a corporate funding environment that to the tune of more than eighty five percent, And the UK is in the same position as the rest of EU, as Europe is funded by bank lending, whereas the US funds its economy to the tune of eighty five percent from capital markets, mostly equities and arranged by the capital instruments, but only
fifteen percent comes from bank lending. And it's the fundamental difference in approach where the UK and Europe have an economy funded mostly by debt, a downside focus bankruptcy, focus protection guarantees, focus funding environment, and where regulation and even more importantly fiscal policies subsidizes debt heavily but punishes equities.
And it's that whole difference in culture that has been induced by many decades of fiscal and regulatory policy that has created the difference, and I think we're today at a point where some pretty thoughtful, radical reform is needed. There's no shortage of innovation, great academic institutions, technological entrepreneurial spirit, capital, all the ingredients are there, except for the fact that
we can't scale them up. And you can't scale up the industries of the future, particularly tech, without far deeper equity markets.
So then why is government not listening, not taking that advice? Why are they not going to be Edinburgh full?
It drives essentially down to one element, which is in the ukn Europe, policy makers to control the distribution of capital to the corporate sector influence it. If you have a very oligopolistic, very concentrated banking industry dependent for its regulation, for its capital ratios on the central bank, there for the government, you're essentially of a government which is at the heart of a capital distribution system where it's not investors that make the decision on which technology is going
to be scaled up. Ultimately it has to go to the banking sector.
While did you think that the conversation in the UK specifically has reached this crescendo point. Why is it now that you know we hear much more from business about this now about the possibility of chay.
Because I believe that the UK has a lot more to lose than the rest of Europe. London was an undisputed global financial hub, a leader, if not the number one in my opinion, it was number one in many areas. And we're now seeing in some areas some of that leadership being frittered away, going away, and those are the numbers. This is not a political debate, this is a technical debate.
So there are those who are part of building that global leadership, building the global compression engine and interest rates to what Clearing at the London Clearinghouse was not an easy thing to do. This goes back to twenty fifteen and sixteen. LCCH became the biggest clearing house in the world, the biggest financial complex. And when you see those advantages being frittered away, a lot of the folks that work incredibly hard to secure this advantage, some of them start speaking out.
The fifty billion pound fund for investment, the Lord Meth the City of London, Nicholas Lines proposed it, Labor had backed it. There is this idea that this money would take pension fund investment cash and then push it towards growth businesses. It seems to have some backing. Others are quite critical. Again, is that tinkering in terms of opinions.
They're plentiful and they're cheap. But US equity markets trade seven hundred billion dollars every day. The whole of the UK and Europe trade seventy billion, So there is no lack of capital in Europe. There is no lack of great technologies. The UKs some of the most fantastic universities in the world. As a great deal of entrepreneurial spirit. There is no problem with the startup economy, but we're
not freeing, unleashing the full power of equity markets. And equity markets are essentially private investors, institutional investors, pension funds, insurance companies making the bets for the future, for future growth. That is the power that we risk eschewing. If we look at government driven solutions, where public money again gets in a fairly minor fashion ere marked to fund technology, it's not the way this works.