We are all aware of the ubiquity of American products and services in our lives. But very few of us are aware of our uniqueness as an American asset in Europe.
Or the extent of the US’s corporate and financial control in the UK, and how much damage this control does to our wellbeing, even as it bestows the mixed benefits of a C21st economy! The author, Angus Hanton, writes in very accessible prose, and explains in depth how little sovereignty and independence we retain now that we are effectively a Fifty-first State.
US-owned enterprise owns at least 25% of UK GDP – more likely around a third. This proportion is growing fast. Equivalent percentages in other European countries are in single digits, and putting this another way, more than half of US investment in Europe is in the UK. The book explains why and how this came about, what the consequences are, and some proposed solutions.
But how can this be a ‘bad thing’? We have been told for years that Britain is a prime location for inward investment, and we are often top of the leader board for inward investment in Europe. This is highly misleading – almost certainly deliberately. Consider 2 types of investment: the first – often highly desirable – can lead to new development and employment in the target country, with an increase in GDP and the tax base. The other – far more common here – is a straight takeover of a successful UK company. Our Utilities will immediately spring to mind as targets, and other famous names such as Cadburys and Boots. So, as we applaud ourselves for our openness and our brilliance at attracting investment, we see the consequences outlined below, and thus are we both deluded and poorer.
Hanton explains at some length the true reach of U.S. companies. They control or compete successfully (nothing wrong with that!) in a virtually endless list of sectors. Innumerable supermarket items, all forms of online platforms and activity, legal, consultancy, banking, asset management, insurance, advertising, ‘real estate’… and so forth. There is continuous infiltration into the Health Service, including GP surgeries and now even dentists. Note particularly the online platforms (Amazon, Airb’n’b, Google, Meta etc). They often monopolise a service or online space – and take great care so to do – and can command rents and service fees, often from both suppliers and consumers of their service. These platforms are seen as hugely extractive, very profitable and highly tax-effective for the owners. Yanis Varoufakis explains this new form of capitalism in his recent book ‘Technofeudalism’, which is vital to our understanding.
So why the UK for takeover investment? There are many reasons. Some probably apply to many countries, others perhaps peculiar to us.
Purchase of any UK company offers many opportunities. Some will be genuine business opportunities, such as rationalizing production overseas or extending marketing reach across the USA or beyond. But several factors make such purchases an open goal. Firstly, corporation tax can probably be eliminated via judicious use of overseas charges for Intellectual Property rights, interest and management charges. This immediately enhances the present value of a purchase, and is the reason that so many foreign-owned companies have negligible corporation tax in the UK whilst being highly profitable in Group accounts.
But one overriding differentiation versus other European countries is that Britain has consistently encouraged such investment, whilst France and Germany – for example – create barriers to try and keep critical home-grown assets. This extraordinary openness by us (together with feeble regulation) has given us Utilities as financial playthings for overseas investors and the likes of Thames Water, and numerous other companies which do not adequately contribute to the common weal.
Conclusion.
Other reviewers have called this book vital reading for all politicians, and indeed for anyone who wishes to understand our place in the world.
There is a supreme irony in that the UK – the country which perfected the art of wealth extraction from others such as India two or three centuries back – should now be the target of the C21st equivalent at the hand of a new master.
As I write (late April 2025), the Chancellor, Rachel Reeves, is negotiating for a new UK-US trade agreement. Its various effects are for another day, but in the meantime, I sincerely hope that she has read and digested this book!
P.E.