by TOM HAZELDINE
Britain goes to the polls on 4 July, but one issue not on any politician’s lips is the country’s relations with the Land of the Free. Angus Hanton’s Vassal State: How America Runs Britain is the latest book to break this Westminster taboo, doing for business studies what Tom Stevenson’s Someone Else’s Empire recently did for foreign affairs. The book is a statistical barrage documenting the very high proportion of UK corporate assets owned by US multinationals, private equity and big tech. Parliamentarians who fulminate about China’s TikTok and Huawei may be barking up the wrong tree, it seems. Hanton considers why Britain has been singled out by American capital and urges action to tackle the country’s ‘abject’ economic dependency.
On Hanton’s figures, the UK accounts for 30 per cent of American overseas investment and over half of US corporate assets held in Europe, making New York–London the ‘biggest route of cross-border takeovers in the world’. American investors hold $2 trillion of British assets while UK investors own nearly $700 billion of US assets – actually a favourable contraflow for Britain, given relative GDP and population, but affording US capital a bigger stake in a smaller foreign economy. The Americans employ more people in Britain than in France, Germany, Italy and Spain combined. Vassal State calculates that the larger US-based multinationals earned $88 billion in Britain at the time of the last general election, equivalent to £2,500 per UK household and largely tax-free (of course, most tax havens are located in British jurisdictions). It stresses the overtopping size of the larger American companies, the valuations of Apple and Microsoft (each over $3 trillion) individually greater than the combined value of the British FTSE-350.
Dig into any economic sector and you will likely strike American ownership, the book shows, compiling a shopping basket of goods dominated by the likes of Kellog’s, Mondelez, General Mills, Mars, Kimberley-Clark and Colgate-Palmolive. On the ailing high street, an outsize American presence includes Boots the chemist (Walgreens) and bookstore chain Waterstones, as of 2018 owned by Eliott Investment Management of West Palm Beach, FL. Amazon, meanwhile, has captured 30 per cent of all online commerce, partly as a marketplace for third-party sellers – one of many US ‘toll bridges’, as Hanton puts it, within the digital economy. Domestic consumers and companies must negotiate American tech platforms to access their home market, whether it is advertising via Facebook or Google, buying services on Deliveroo or Uber, networking through LinkedIn or Bumble, or paying for things using PayPal or Visa. These digital fiefdoms don’t just apply to the UK, but Vassal State pointedly contrasts the country’s sluggish economic growth since 2008 with the skyrocketing UK earnings of US tech firms over this period.
In the City, the number of firms trading on the Stock Exchange has fallen by 40 per cent since 2008: firms have been taken private or relisted in New York. US shareholders control a quarter of the remainder. Hanton identifies only three British entries in the Forbes list of the hundred largest publicly traded companies – GSK, HSBC and Unilever, each dating back to the nineteenth century. In the West End, Hanton takes in the branch offices of private-equity behemoths Blackstone, KKR and Apollo, leading buyers of British industry. ‘The true financial capital of the UK’, he argues, ‘is located on Manhattan Island’.
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