Since former Prime Minister Margaret Thatcher unleashed a wave of privatisations in the 1980s, the London Stock Exchange (LSE) has been a symbol of Britain’s free-market economy.

But the LSE has lost its mojo. The more than 300-year-old bourse is shrinking as companies opt to go public elsewhere, shift their existing listings to the US, and accept deals to be taken private.

London has been suffering from a multiyear drought in initial public offerings.

The UK used to be among the top five venues for IPOs by fundraising volume, but this year fell out of the top 20 as the total capital raised across the first three quarters was the weakest showing in more than 35 years.

The country now lies in 23rd spot in the global ranking.

London’s reputation as a listing destination for international companies has suffered as several firms — including building materials provider CRH and online betting group Flutter Entertainment— chose to switch their main share listings to New York.

More defections look to be on the way.

The shareholders of fintech company Wise approved a proposal to shift its primary listing across the Atlantic. It’s one of more than $10bn worth of London-listed firms that have announced or executed plans to move to New York in recent years, Bloomberg calculations show.

Drugmaker AstraZeneca, the most valuable company in the FTSE 100, announced in September that it will replace its American Depositary Receipts – tradeable certificates that mirror the underlying foreign security — with a direct listing on the New York Stock Exchange.

London has missed out on some key new listings, too. E-commerce giant Shein abandoned plans to float in the city after it was unable to secure approval from Chinese regulators. It’s instead shifted its IPO preparations to Hong Kong.

That may take less of a toll on the British psyche than the loss of homegrown technology gem Arm Holdings, whose semiconductor designs underpin almost every mobile phone on the planet.

Arm was listed in London before being taken private by Japan’s SoftBank Group in 2016. Despite lobbying by UK government ministers and an offer to relax listing rules, SoftBank chose to relist Arm in New York and it joined the Nasdaq in 2023.

From January through September, companies listing in London raised just $248mn, according to data compiled by Bloomberg, a 69% plunge from a year earlier. IPO fundraising in the US over that same period amounted to nearly $54bn.

The UK has long struggled to compete with the US market, which is far bigger, more liquid and has a deeper pool of investors.

Listing in the US brings the opportunity of securing a higher valuation and raising more capital.

The LSE, Financial Conduct Authority and UK government have been trying to resuscitate the country’s moribund capital markets. Prime Minister Keir Starmer has pledged to review regulation that’s “needlessly holding back” investment.

The FCA is said to be in early-stage discussions about changing its rules to shorten the process for companies to go public by a week, as part of its efforts to boost London’s appeal as a capital markets hub.

London’s wider problems appear to fit the narrative of a nation whose economy has run into trouble, hit by under-investment and the jolt to trade from Brexit.

While Brexit has played a role in investors shying away from London, the malaise has been decades in the making.

A deeper productivity crisis has pushed Britain’s economic performance into the slow lane in relation to other Group of Seven developed nations, and regulatory changes prompted a slow exodus of domestic capital from UK equities.