As much as politicians like to complain about short-termism in business, they themselves are particularly guilty of short-termism on business policy. All too often tomorrow’s headlines are put ahead of the long-term economic prospects of the country.
A good example of this habit is the perennial moral panic over the idea of foreigners buying a well-known British firm. The easiest thing in the world is for a minister or shadow minister to hand-wring about the supposed “loss” of a British company, regardless of the realities of the deal.
Take the current attempt by Pfizer to take over AstraZeneca. Various people are huffing and puffing about the idea, but the main concern seems to be at the idea of foreigners owning a British brand.
For a start, the idea of the firm as a purely British brand is misfounded. While “Zeneca” is a made-up name, fabricated by consultants to mean precisely nothing in any language (how very 1990s), the “Astra” part comes from the historic Swedish firm with which it merged in 1999. It’s ironic that while the current fuss is all about the idea one business buying another in a different country, the “great British brand” AstraZeneca was born by exactly that process – only in that successful merger, the aggressive buyers were Brits.
To focus simply on the nationality of the owners is to miss the point – what benefits Britain is where it does its business and where it pays its tax. Pfizer (who, incidentally, have a British-born CEO, another dent in the Big Bad Yanks myth) intend as part of the deal to move the headquarters of the merged company, and therefore its tax domicile, to the UK. That’s great news for the Exchequer, and a vindication for George Osborne’s strategy of reducing Corporation Tax and increasing patent rights in recent years.
Instead of panicking about the idea, we should be celebrating what is in effect the poaching of a major business from the US to the UK, achieved by sensible, low tax policies.
There was a time when the idea that British car manufacturers might be bought by foreign interests was a heresy, an assault on the nation’s pride and its economic interests. And yet, under those foreign owners car manufacturing in the UK has experience a renaissance – another success for Britain achieved by the pursuit of open, free markets. It may be easy to ignore those success, or to conveniently forget the many dark days in the British-owned car industry, but it’s wrong to do so nonetheless.
Of course there are strategic industries in which British ownership can be relevant to the national interest. For example, it’s valid to wonder if it’s wise or entirely secure to give Chinese firms (whose future existence depends on the consent of China’s totalitarian state) sensitive roles in the nation’s telecommunications. But for the bulk of the market, we should surely be more concerned about our balance of payments, our tax base and the location of jobs than in the nationality of the people who own the share certificates.
Ultimately, the question boils down to the same old argument about protectionism – ill-informed kneejerk reaction today costs British jobs tomorrow. Instead of wringing their hands about Pfizer’s decision to move to the UK, politicians of all parties should be on the hunt for the next US giant to tempt into low tax Britain.