The UK is lagging behind its continental rivals in online investing, according to a new research report, with Germany holding a clear lead in online broking accounts followed by Sweden and France.
According to the report, prepared by investment bankers J P Morgan, Britain has one-third of Europe’s shareholders but only 7% of the continent’s online-broking accounts. It cites a number of reasons for this, including the low savings rate in Britain (4% of disposable income as opposed to 12-13% in most of Europe). And young Britons tend to invest so much money in their homes that they have little left for the stockmarket. In Germany, by contrast, equity investment is taking off at the same time as the Internet. Online broking has been further boosted by Frankfurt’s technology-dominated Neuer Markt.
Morgan also points to the UK's expensive clearing and settlement system, the influence of stamp duty and, most importantly, an over-reliance on paper transfers. Some three-quarters or more of all retail share-deals in Britain are settled by the transfer of physical share-certificates rather than electronically, through nominee accounts.