The Incubator Economy

There is a special kind of institutional stupidity reserved for countries that are very good at creating things and catastrophically bad at keeping them. Britain has refined this into an art form. We invented the worldwide web, the jet engine, and the programmable computer. We currently do not own any of them in any meaningful sense. You’d think at some point we’d notice the pattern.

We haven’t.

The UK managed 18 IPOs in 2024. The United States managed 216. DeepMind was born in London and is now a division of Google, which is based in California, which is not London. Revolut and Monzo — built here, staffed here, regulated here at considerable expense — are both eyeing the New York Stock Exchange with the expression of people who’ve just discovered the local pub has been converted into luxury flats. The UK Parliament’s own Communications and Digital Committee has formally concluded that Britain is becoming an “incubator economy.” A creche for American venture capital. A very expensive research facility with someone else’s name on the door.

The remarkable thing about this catastrophe is how thoroughly optional it is.

The obstacles are not geological. They are the accumulated consequence of regulatory timidity, pension fund rules written by people who appear to believe that British growth companies are somehow riskier than Chilean copper futures, and a support infrastructure so labyrinthine that founders require consultants to navigate the application process for help they are theoretically entitled to receive. This is not bad luck. It is bad government, which is a different thing, because bad government can be fixed.

The combined English-speaking market of these islands is roughly 72 million people. Large enough to prove a product. Large enough to sustain a company through its awkward teenage years. Large enough, in short, to stop being a feeder system for Sand Hill Road. We are not short of talent, ideas, or capital. We are short of the institutional architecture to connect them. Here is what that architecture looks like.

First: The Britannic Scale-Up Passport. A company incorporated in the UK should be able to raise capital, hire talent, and operate commercially without drowning in duplicate regulatory compliance every time it crosses a border or opens a new market. Not harmonisation — nobody needs to surrender their framework. Mutual recognition of standards, the same arrangement the UK has already made with a dozen countries for professional qualifications. The City of London can extend this unilaterally to any jurisdiction willing to reciprocate, starting with the ones two hours away by air. If it works for Liechtenstein, it works for Cork.

Second: unlock the pension funds and build a proper growth vehicle. British pension funds are sitting on hundreds of billions in institutional capital, almost none of which flows to British growth companies. The Canadian pension funds — operating under rules that actively encourage long-term domestic investment — keep turning up on the shareholder registers of British infrastructure and British technology companies as if to make a point. We wrote the model they adapted. We declined to apply it to ourselves. Change the rules. Set a target. Then task the British Business Bank with a specific mandate: a fund of funds, capitalised seriously, that targets scale-up rounds in British companies and treats co-investment with allied institutions as a feature rather than an afterthought. This is not foreign aid. It is the government investing in its own tax base, which is the whole point of government.

Third: eliminate the friction, all of it, immediately. Roaming charges between the UK and Ireland are a self-inflicted tax on integration that costs nothing to remove and would be noticed the same day by every person it currently annoys. Remove them. Beyond that: automatic mutual recognition of professional qualifications across these islands, so that an engineer or doctor or lawyer qualified in one jurisdiction can work in another without a two-year reaccreditation odyssey. These frictions are not protecting anyone from anything. They are the sediment of administrative inertia, and inertia is not a policy.

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The talent is here. The ideas are here. The capital is here — it’s sitting in pension funds that have been given every regulatory incentive to look elsewhere and no compelling reason to look home.

That is a choice. It can be unchoiced.

We are not asking for vision. We are asking for competence. At this point, the bar is not high.