Royal Mail IPO Boosts UK Economy
Royal Mail shares have rocketed by more than 38% at the start of conditional dealing on the stock exchange. Due to the over-subscription of the sale of Royal Mail shares, the government has limited the number of shares that individuals could purchase to £750, in favour of small investors. Those who applied for more than £10,000 will not receive any shares; this is an attempt by the Government to reward “ordinary investors”, rather than the big professional investors, which should provide a further boost to the UK economy. Amid accusations that the company has been severely undervalued, the government needs to reassure taxpayers that it still has their best interests in mind and that Cameron isn’t just rewarding his friends in the City.
The privatisation of Royal Mail should make it more efficient and more competitive as a company, it needs to be able to compete with other delivery services if it is to survive as an institution. By freely allocating 10% of the company to Royal Mail employees it is hoped that it will be deterrent for strike action, which according to Vince Cable would not be in the interests of Royal Mail. The vote for strike action will take place on 16th October, a day after Royal Mail will be officially listed on the Stock Exchange.
The success of the Royal Mail IPO will undoubtedly boost the UK economy, particularly if strike action can be avoided. Thousands of “ordinary investors” will profit from the privatisation of Royal Mail and the boost to the economy is predicted to stimulate the UK property market and cause house prices to rise.