Online car seller Auto Trader employs over 1,200 staff from its Manchester headquarters. © Auto Trader Group plc
As with any investment, your capital is at risk.
Imagine a beautifully tended potting shed, filled with healthy seedlings, each nurtured with care. Now picture those seedlings planted in a garden overrun with brambles and slugs. What would their growth prospects be?
It’s a fitting metaphor for today’s UK economy. The UK boasts world-class universities, skilled engineers, a top-quality workforce, and a proud heritage of innovation. We have everything we need to cultivate a thriving economic future.
Yet a significant barrier stands in the way - the UK stock market, with its low valuations, declining listings and tendency to lose good companies overseas.
At first glance, it can be easy to overlook our home market in favour of seeking out growth globally. But that is a mistake. The UK market is home to great growth companies – If you know where to look. And when we back the best of British enterprise, we benefit twice: we grow our capital, and we grow the future we’ll retire into.
Take Games Workshop, for example. This FTSE 100 company makes wargaming models and sells them worldwide. It even has a tie-up with Amazon to bring the universe it has created to the small screen.
From its base in Nottingham, where it employs approximately 1,500 people, Games Workshop is expanding into new markets in the USA, China and Japan. The company is building a new factory to support that expansion, with more in the pipeline. Global growth is creating local prosperity.
Why public companies matter
There has been a lot of attention paid recently to the vital role private companies play in the UK economy, often serving as incubators for innovation and wealth creation. However, if we’re looking for national economic growth, we can’t stop there.
Think of the economy as a garden. We should absolutely have a glorious private equity potting shed, but if we’re growing our seedlings to be planted out into a public equity market where they’re choked by weeds and eaten by pests, frankly, what was the point? The economy is a garden, and we have to tend it all.
Our publicly listed companies are the bedrock of our economic growth. They don’t just generate returns for shareholders; they create wealth, jobs, and innovation, and they anchor local communities.
When our public companies invest productively, for the long term, they can drive both local and national prosperity.
For example, much effort has gone into building technology hubs nationwide to spearhead growth. But such initiatives are only possible because they are anchored to public companies that create the ecosystem for the resulting start-ups and spin-outs to thrive in.
In Manchester, it’s Auto Trader, the online used car marketplace and classified ads business, which brings the technology, the investment in artificial intelligence (AI) and the careers that attract talented people to the region.
The leading aerospace and defence company, Babcock International, is vital to our national security and a strategically important employer in South West England and Rosyth, Scotland.
For every 100 jobs that Babcock creates across the UK – and last year, it announced 1,000 new jobs in Rosyth – an additional 160 jobs are generated in its supply chain and the local communities.
These are local stories, but repeat them enough times and you get a national effect. When our public companies invest productively, for the long term, they can drive both local and national prosperity.
The power of investment choices
And that’s where our choices and capital allocation as investors make a difference. The purpose of investing is to grow capital, and we do this by giving it to people and companies with good ideas and the capabilities to turn those ideas into reality.
If that happens, it creates growth. Shareholders get returns, and our lives are improved by new products and services. And, as the company grows, it grows our economy.
However, that chance is lost without the investors, pension schemes, and institutional stakeholders to support a long-term vision. The consequences are profound when UK investors allocate capital away from domestic public companies.
Take ARM, the Cambridge-based semiconductor company. It was once listed in London but traded at a discount to its global peers, and that did not go unnoticed. After being acquired by Japan’s Softbank in 2016, it has since relisted in the USA. The company’s centre of gravity has shifted, and in time, the benefits of its growth will shift too. Meanwhile ARM’s value has multiplied fivefold, with most of that growth now benefiting overseas private owners, not UK pension funds or shareholders.
It should remind us that without active, engaged high-quality UK investors, we risk undermining our best companies and losing the benefits of their growth.
A call to action: invest in our future
Ownership matters: long-term, engaged investors are linked to better capital use, higher innovation and greater value creation. Our national prosperity is in our hands. The local government pension scheme (LGPS) alone deploys around £400bn of capital. That level of firepower shifts outcomes, and choosing how to invest it doesn’t just impact returns; it impacts the economy in which its members live and retire.
Yet we allocate away – more global, less UK; more private, less public – actions that might be individually rational but collectively act against our best interests. With each allocation decision, we weaken the ecosystem for those remaining.
The UK index is a horrible misrepresentation of what the best businesses in the country are about. Pouring money into Shell, BP, HSBC, and British American Tobacco is hardly the productive deployment of long-term capital.
But if you know where to look, there are world-leading UK companies worthy of your investment. Take the companies in Baillie Gifford’s new Great British Growth strategy as an example.
Great British Growth has a special focus on supporting UK economic growth. It invests in companies with exceptional growth potential. But, uniquely, it invests where that growth potential is also especially valuable to the growth of our economy and our national prosperity.Those companies have forward earnings, which drive their share prices over the long term, that are higher than the UK index and comparable with what you can get globally.
In addition, their spending on research and development is higher than the index, and their return on investments is higher, meaning they’re getting more value out of their investment. These are growing companies that are successfully investing the product of that growth into long-term future success.
Returning to some of our earlier examples: Babcock’s profits rose nearly 20 per cent last year; Auto Trader has been compounding revenues and operating profit at 10 per cent since its initial public offering in 2015. Games Workshop has grown from a hobby shop to a FTSE 100 company.
Great UK growth companies have all the ingredients for the sort of success that can deliver us all a bright, growing future: innovation, talented people, bold ideas. What’s needed now is investment. So, Buy British. Do it thoughtfully, with the right managers, with the right financial returns, with companies whose growth builds our future economy – but Buy British.
Important Information
The views expressed should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect opinion and should not be taken as statements of fact nor should any reliance be placed on them when making investment decisions.
This communication was produced and approved in November 2025 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.
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This communication contains information on investments which does not constitute independent research. Accordingly, it is not subject to the protections afforded to independent research, but is classified as advertising under Art 68 of the Financial Services Act (‘FinSA’) and Baillie Gifford and its staff may have dealt in the investments concerned.
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