Chart of the month: The UK's capital market
Short-termism in finance and corporate governance has contributed to the proportion of profit that UK companies have been distributing to shareholders, rather than reinvesting into their businesses, increasing over the last quarter of a century. For UK non-financial corporations, the proportion of discretionary cash flow returned to shareholders increased from 39% in 1990 to 46 % in 2014. This has inevitably reduced the funds available for productive investment.
IPPR’s Commission on Economic Justice is examining how best to reform UK finance in order to optimise the allocation of productive investment across the economy.