‘Dozens’ of US firms steer clear of UK following Hunt’s tax raid
Concerns that government policy is weighing on the economy are putting off investment, says KPMG
DOZENS of US multinational companies are shunning Britain because of Jeremy Hunt’s tax raid and a lack of economic ambition, KPMG has warned.
Tim Sarson, head of UK tax policy at the big four consultancy, blamed high taxes and red tape for “at least a dozen… probably dozens” of its US clients deciding not to invest in the UK in the past year.
He said: “We’re definitely seeing quite a big dampening of demand and loud noises about the lack of competitiveness of the UK regime from US investors.
“There’s a general sense of the UK not firing on all cylinders, a reluctance to put investment in the UK and a sense that the country is not quite what it was.
“We’re not quite seen as a basket case, but people will often joke on conference calls: ‘what the hell are you guys doing?’”
Mr Sarson warned that the “signalling” from planned tax rises was enough to put off investors.
“What we can’t get away from is that the UK is now no longer trying to be a low-tax location. It is now just somewhere in the middle of the pack,” he said.
The comments will add to pressure on Mr Hunt to cut taxes and introduce more pro-growth policies in the upcoming Budget.
A growing number of business leaders and industry representatives have expressed concerns about the direction of government policy, warning it risks consigning Britain to years of low or no growth.
One of Britain’s most prolific insurance tycoons denounced the Chancellor for sticking to a planned corporation tax rise from 19 per cent to 25 per cent.
Sir Peter Wood, who co-founded Direct Line, told The Sunday Telegraph: “Don’t increase corporation tax now. It will dampen growth when we desperately need to encourage employers to go for growth.”
Sir Peter, who is part of a consortium that has agreed to rescue funeral firm Dignity, added: “The Government has a duty to collect taxes just as we all have a responsibility to pay our taxes. But not a hike in corporation tax, and not now.”
It comes after SoftBank’s Arm and CRH, the world’s largest building materials group, last week shunned the City in favour of stock market listings in New York. The move is a blow to Rishi Sunak’s ambitions to make London the first choice for tech flotations. Drug giant AstraZeneca also recently snubbed the UK in favour of Ireland for the location of a new factory, citing what its chief executive described as a “discouraging” tax rate.
“The UK used to be a popular place to put your headquarters and now it’s seen by many as just another sales jurisdiction,” said one source.
Mr Sarson urged Mr Hunt to use the Budget to come up with a “clear plan” for growth including “generous upfront investment incentives in areas of the economy that we want companies to invest in”.