The FTSE 100 index has plummeted to its lowest level in two months after Donald Trump announced a wave of tariffs on Tuesday.

When the index closed yesterday, the London stock market was down by more than 100 points, 1.2% to 8496. It was the sixth session in a row to fall.

British Airways owner IAG fell by the largest figure, down 6.4%, while Holiday Inn owner IHG was also down by 3.6%. Pest controller Rentokil fell by 4.5%, and industrial components groups Diploma and Spirax were down 4.4% and 3.8%, respectively.

It comes as US stocks dropped again after huge uncertainty caused by the President’s tariffs plan.

Donald Trump‘s global trade war has escalated, with a 25% levy on steel and aluminium coming into force overnight in the UK and EU.

The European Commission has vowed to impose “countermeasures”, with European Commission Ursula von der Leyen saying: “We deeply regret this measure. We are ready to engage in meaningful dialogue.”

However, Britain is keeping a “cool-head” as Exchequer Secretary to the Treasury James Murray says “the UK is in a “very different position than the EU”.

“The UK and the US have been negotiating rapidly for an economic agreement, and so we’re in a position where that negotiation is ongoing and these global tariffs, if you like, have landed in the middle of that work,” he told Sky News.

“So we don’t want to be pushed off course by this.

“We want to carry on with our rapid negotiation toward an economic agreement, because we think that’s in the best interest of British businesses and the British public.”

The FTSE 100 has, however, opened higher this morning after Donald Trump reversed his plans to double tariffs on Canada’s steel and aluminium sector.

Tuesday saw the UK’s blue-chip index drop 1.2% following the announcement to raise metal tariffs to 50% levy on his closest ally.

After Canada hit back with a retaliatory 25% electricity export tariff, the President backtracked down to his original plan of 25%. This saw the the FTSE 100 bounce back by 0.2% to 8,512.37.

Rachel Reeves has been warned she risks ‘taxing the UK out of existence’ after a string of budget tax hikes caused a mass exodus from the London Stock Exchange.

The Financial Conduct Authority (FCA) set out plans for a new private stock market system this week, in an attempt to encourage more businesses to list in the UK and stop an exodus that may have cost the UK economy £100bn already.

In a consultation document, the City watchdog said the new stock market system, PISCES, tabled by the previous government and confirmed by Rachel Reeves at Mansion House in November, would allow investors to take stakes in private companies and therefore help fund more UK start ups.t.

The FCA said: “A world-leading innovation in private markets, PISCES could provide opportunities for more diversified returns for investors.”

But Richard Wilson, chief executive of interactive investor said while the plans may go some way to encouraging more firms to stay in the UK the government was “taxing the UK stock exchange out of existence”.

Wilson adds: “We tax every purchase on the main London market at 0.5 per cent, a tax otherwise known as the stamp duty reserve tax.”

“This is a staggering 2.5 times higher than the equivalent levied in EU countries, and our main competitor, New York, charges nothing.

“As we have said time and again, markets live or die on flow, and the stock market today has become untradable. This impacts depth and valuations and leads to those who can list elsewhere, mostly growth businesses, doing so. What is left is mostly legacy industries who will eventually expire or move.

“If UK plc wants to support entrepreneurs and retain its great talent base it must support its financial markets. If the market dies, then growth and with it ultimately our standard of living are sacrificed.”

Wilson added that investors also suffer, as stamp duty is a huge barrier to investing.

“Recent research we conducted found that nearly four in ten investors had decided against investing in UK shares in the past because of stamp duty. Additionally, the majority claimed that the tax would make them think twice about investing in UK shares in the future. How can we encourage investors to ‘buy British’ when they are penalised for doing so?

“So far, these arguments have failed to convince the politicians to care. Most of them have no clue what financial markets do or why they matter. They think it’s just self-serving rich people playing with their money, it’s easy to count the tax and doesn’t win any votes. These are ‘cloth ears’ to fit the size of the proverbial elephant.

“We urge the Government to recognise the scale of this problem and act decisively. This isn’t just for the health of our markets, but for the health of the UK economy. It is a lose-lose tax. We simply can’t afford not to fix this issue.

“It may not be too late. By removing stamp duty, we can restore the UK’s position as a global financial leader, attract businesses back to our markets, and create opportunities for both companies and investors. But time is nearly up.”

The exodus of companies from the London Stock Exchange due to takeovers has reached the highest level in 14 years, in a major blow to Keir Starmer‘s government.

Forty-five firms have dropped their listings in the Capital so far this year because of mergers or acquisitions, according to figures compiled by Bloomberg, as concerns persist that economic conditions are putting off investment.

With the UK economy apparently on the brink, this year has seen a number of major deals, with the sale of video game company Keywords Studios to private equity company EQT, the sale of Virgin Money to Nationwide, and Thoma Bravo’s aquisition of cybersecurity leader Darktrace, according to The Telegraph.

The coming months are expected to bring further sales, including Carlsberg’s purchase of Britvic, and Czech billionaire Daniel Kretinsky’s bid to aquire IDS, the owner of Royal Mail.

Meanwhile, mining giant Rio Tinto, one the biggest firms on the exchange, is coming under pressure to de-list, with activist investor Palliser Capital telling the firm that its Anglo-Australian structure had cost shareholders £39.5bn.

The multi-strategy investment firm has called for an independent review of the arrangement to be launched.

It comes as business leaders and analysts have criticised the UK’s trading environment, with concerns about Britain’s ability to match other major economies.

Nikolay Storonsky, chief executive of fintech firm Revolut recently branded London listing as “not rational”, in an appearance on the 20CV podcast.

Storonsky cited the 0.5% stamp duty tax on trading as a factor, as he questioned how the UK measures up to the US.

This summer, Wealth Club, an investment platform for affluent and sophisticated investors, released its inaugural “British Wealth Report”.

It found that 55% of high-net-worth individuals feel the country does not support wealth creation or creators, while 42% consider the country an unattractive place to set up a business, as per Business Matters.

Meanwhile, 31% said they were more inclined to leave the UK for financial reasons compared to a year ago, in a major blow to Keir Starmer and Rachel Reeves.

Nicholas Hyett, Investment Manager at the investment service, said at the time: “The UK has an image problem. Wealthy investors view the country as an unappealing place to start a business, citing a culture unsupportive of wealth creators and burdensome taxation.

“These individuals are crucial to the UK economy. The top 100 earners contribute an average of £46 million in tax each, while the highest-earning 100,000 cover a quarter of the total income tax and capital gains tax bill, despite representing just 0.3% of UK taxpayers.

“This data, obtained via a Freedom of Information request to HMRC in November 2023, underscores the importance of changing this group’s perception of the UK.”

Last week, a Treasury spokesperson said in an statement to City Am that Chancellor’s “top priority is growth and making the UK the most attractive place to invest”.

“UK capital markets have raised more equity capital in 2024 than the next three European exchanges combined, and recent reforms to Listings Rules will make us an even more attractive destination for exciting businesses,” they added.

A Treasury spokesperson said: “Growth and driving more investment in the UK is our number one mission.

“Recent IPOs and listing announcements by high-growth companies like Raspberry Pi and Canal+ demonstrate confidence in our capital markets and there is more we can do to attract exciting businesses to the UK.

“That’s why we are creating pension megafunds to unlock billions of pounds of potential investment for businesses, as well as backing the largest overhaul of UK listings rules in decades.”

Express.co.uk has approached Rio Tinto for comment.

Just Eat Takeaway said it planned to delist from the London Stock Exchange by the end of this year, blaming the administrative burden of being dual listed in Amsterdam and London.

Just Eat Takeaway.com was created in 2020 between a merger of the London-based Just Eat and Amsterdam-listed Takeaway.com.

It decision follows a slew of other companies who have already quit the LSE, claiming a London listing is not worth it and that other financial centres, such as New York, are more business friendly.

Cambridge-based microchip designer ARM Holdings was once listed in London but moved to the New York stock exchange as has the owner of Paddy Power, Flutter. Shell has also warned it may quit London for New York.

Reeves and her predecesor Jeremy Hunt have expressed a determination to lure more companies to list in the UK, and both have held summits with business leaders.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said Just Eat’s decision was a blow to the City and a setback for the government especially given its efforts to encourage more firms to list in London.

“Just Eat cited a litany of reasons for withdrawing from the London Stock Exchange, showing just how much work still needs to be done to simplify rules to help retention and lure more firms in.

“Management described the administrative burden, complexity and costs associated with regulatory requirements, but also low trading volumes on the London market.”

Streeter said investors were enthusiastically buying up UK equities, around 35 per cent hold UK equities directly with around 75 per cent of trades by value taking place on the London market.

She added:”The government’s commitment to support increased retail participation is welcome, and proposals should be accelerated into concrete action. Too many people are sat on excess cash savings which could be deployed in the stock market, delivering longer term returns and supporting the UK economy.

“There is untapped demand to invest in UK listings. The Raspberry Pi IPO was significantly oversubscribed by retail investors, so there are still supply side issues to fix. All too often retail investors are cut out of IPOs and secondary capital raising rounds.

“The Financial Conduct Authority’s recent publications on the Public Offers and Admission to Trading Regulations regime, which aims to reduces barriers for retail investors as a desired outcome, is welcome and needs to be enacted.’’