Abstract
This study uses an annual data to study the recent contribution of performance of stock markets (London Stock Exchange) in the economic performance of United Kingdom from 2001 to 2009. Economic growth indicators that have got direct impact on economy were identified through the primary data collection and those controllable variables were used to give the overall direction on the economy. The result shows that the capital market (stock market) development which has been measured by stock market capitalization and economic development measured by Gross Domestic Product (GDP) has positive significant correlation with each other. The further analysis of the data has been made with regression analysis. The Stock Market Capitalization, Foreign Direct Investment (FDI), Government Expenditure and Government Revenue have been regressed against GDP to give the further picture of the analysis. The positive values of regression analysis, which are significant with the correlation analysis, show that sustainable long-term growth can be achieved by developing and encouraging the capital market.
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