Britain as a world leader in “high-tech” industries

One of the three British microprocessor producers was making 70% of British silicon wafers required for new information technology even in the seventies. On Nov.3.1999 Techmark, a new technology market, was launched at the London Stock Exchange. According to Gordon Brown, Chancellor of the Exchequer, Techmark will be the London Stock Exchange “market within a market” for innovative technological companies.

The specialised institutions are agencies created to meet the needs of specific groups of borrowers mostly industrial and commercial - which are not adequately covered by other institutions. They operate in both public and private sectors. In general they offer alternative funding to that provided by banks and building societies. Some of them were set up with Government support and with financial backing from banks and other financial institutions. Some public sector agencies offer financial support to industry in Scotland, Wales, and Northern Ireland.

The main private sector institutions are finance houses and leasing companies, factoring companies, finance corporations and Venture Capital Companies.

Finance houses are major suppliers of hire-purchase finance for the personal sector of short term credit and leasing to the corporate sector.

Leasing companies buy and own equipment required and chosen by businesses and lease it at an agreed rental rate.

Factoring companies provide cash for a company in exchange for the sums they owe. A factoring company buys up a client’s invoices as they arise and finances up to 80% of the value of the invoices; the rest is paid after a period, after deduction of administration and finance charges.

Finance corporations meet the need for medium and long term capital when such funds are not easily or directly available from traditional sources such as the Stock Exchange or banks.

Venture Capital Companies offer medium term and long term equity financing for new and developing businesses when such funds are not readily available from banks and other traditional sources. The British Venture Capital Association has 103 full members, which make up over 99% of the industry.

Financial markets is a collection of sophisticated securities, futures and options the money market, the euro currency market, Lloyd’s insurance market, the foreign exchange market and markets in bullion and commodities.

The Stock Exchange

The origin of the London Stock Exchange goes back to the coffee houses of the seventeenth century where those who wished to invest or raise money bought and sold shares in joint stock companies. Brokers later opened their own subscription Economy of the country has been directed through the City which is the nerve center of the national finance. The greater part of the country’s income comes from invisible exports - operations originating from the City and flowing through its channels.

A large proportion of Britain’s wealth has been invested by the City overseas. A number of banking institutions have their head offices in Britain but operate mainly abroad in particular regions such as Latin America or East Asia through extensive branch networks. The major bank in this sector is Standard Chartered. This shows how the City of London expands its activities beyond the country’s borders; the same goes for the influence of the London Stock Exchange and Commodities Exchanges (particulars of the City of London as a financial center will be dealt with in Chapter three).

Chapter 3.

The City of London as a Financial Center, its Main Institutions.

There has been a long tradition in Britain of directing the economy through the great financial institutions together known as “the City”, which until 1997 were located in the “Square Mile” of the City of London. This remains broadly the case today, though the markets for financial and related services have grown and diversified greatly.

Banks, insurance companies, the Stock Exchange, money markets, commodity shipping and freight markets and other kinds of financial institutions are concentrated in the solemn buildings of the City and beyond its borders. The City of London is the largest financial center in Europe. London is also the world’s largest international insurance market and has the biggest foreign exchange market.

Britain’s financial service industry gives about 6.5 % of its gross domestic products (GDP) and contributes some 35 thousand million pounds a year. The largest contributors are banks, insurance, institutions pension funds, and securities dealers. To help Britain’s financial services to respond to the competition and at the same time to protect the public investment, the Government introduced 3 pieces of legislation to supervise financing the industry: the Financial Services Act (1986), the Building Societies Act (1986) and the Banking Act (1987). Under these acts investment businesses need to be authorized and they have to obey rules set in the legislation. The main responsibility to supervise were the Bank of England, the Building Societies Commission, the Treasury and the