Opinion: Britain needs a tax break
Latest forecasts from the International Monetary Fund (IMF) show that UK growth at 1.2 per cent this year and 1.4 per cent next will lag that of the US and Canada. Despite nostalgia in some quarters for a return to the European Union, the UK's fleet-of-foot services-led economy outpaces Germany and France.
The IMF has upgraded forecasts for global output this year and in 2026. In April, the Fund's projections were overshadowed by Liberation Day tariffs. But Britain, Japan, India and the EU have limited damage. The US and China are still working on a deal so, critically, a new era of beggar-thy-neighbour retaliatory actions has been averted. The brakes on globalisation have been applied. Data from Yale University's Budget Lab shows that, after the EU deal, the average tariff for goods entering the US will be 17.3 per cent, the highest since the 1930s.
There is no mystery as to Donald Trump's remedy for dealing with stuttering growth. As master instructed pupil Keir Starmer in Scotland this week, the best way forward is lower taxes. Lessons of October 2024 must be learned. Every tax increase outlined, from NI and capital gains to inheritance and stamp duties on lower priced homes, stymied commerce.
Simple changes to the tax system could help. Abolishing stamp duty on share trading would boost listings and confidence. Including digital expenditure in full expensing of capital spending could light a fire under AI and biotech. As wonderful as reviving tin production in Cornwall may be, spending money on an AstraZeneca plant just might have averted the pharma giant's American tilt.
Captain America
AstraZeneca boss Pascal Soriot has good reason to look across the Atlantic. A knighthood is one kind of recognition. But Keir Starmer's government has still to come up with a credible pharma strategy. A fixation on steel, car making and renewables has left medicines, one of Britain's most dynamic industries, in the lurch. Soriot remains tight-lipped on a move of Britain's largest listed company to New York. His current enthusiasm for America shows no bounds.
A £37billion US investment strategy and a promise of local manufacturing is his ace card. AstraZeneca has two world class R&D centres and a workforce of close to 20,000 in America. It has good reason to double down on a market which represents 40 per cent of sales. Speaking to CNBC, the Astra boss also praised the US for its science and innovation. There was barely a mention of home territories in the UK and Sweden. AZ's pipeline of oncology drugs is as strong as ever with sales up 15 per cent at £9billion, contributing almost half of total revenues in the first half of the year.
Next on the agenda for Soriot is an oral compound designed to take on leaders Novo Nordisk and Eli Lilly on weight loss. He believes that his company can deliver Americans an oral medicine at a cheaper price than rivals. The meltdown in first mover Novo Nordisk's share price suggests investors believe the weight loss tortoise could, eventually, catch the hare.
Trading places
Barclays is thriving despite a reputational hit from the Jes Staley-Epstein relationship. Goldman Sachs looks to be cooling off on the UK. But Barclays retains its place as Europe's most influential investment bank. It is a big beneficiary of volatility since Liberation Day with profits climbing by 23 per cent on the back of an industry beating 26 per cent gain on fixed interest, currencies, and commodity trading. As chief executive Venkat reiterated, success should not be an excuse for Labour to clobber banks with more tax.
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