ABSTRACT
A major and long-standing source of controversy in the analysis of the United Kingdom’s economic performance has been the role of the City, and more specifically the London Stock Exchange, in influencing industrial performance. On the one hand the City represents one of the two major financial centres in the world, provides highly knowledgeable and flexible markets for all manner of financial instruments, includes some of the largest investing institutions in the world and, in conventional terms, has one of the most efficient stock exchanges anywhere providing an easily accessible market for corporate control. This in turn is seen by many as a key discipline on industrial companies’ managers and a crucial mechanism for allocating or reallocating resources to their most efficient uses. On this view the City is not only a major contributor to GNP and overseas earnings but a significant and more pervasive contributor to economic welfare.
