Americans love Britain, and in many ways the British admire Americans, but the benefits of the relationship are becoming increasingly one-way.
That’s the argument set out in a book published next month documenting how US companies have made inroads into the UK economy by exploiting a desperate need for investment, weak regulation and a public that seems oblivious to the cost to themselves and, ultimately, the economy.
Clinton, Bush, Obama, Biden: whichever administration is pulling the levers, presidents pay lip service to a special relationship with the UK. Each one makes sure US companies leverage Washington’s power to gain entry, kill off local competition, secure monopoly control and run off with the profits largely tax-free.
But UK companies that try to break into the US face huge legal and regulatory hurdles. It’s true that selling goods to America is a lucrative business. That’s not the same as setting up a US subsidiary in the US and going head-to-head with domestic corporations.
Labour leaders fall into the trap of lauding energetic and profitable US companies as much as their cheering Tory counterparts do. Tony Blair and Gordon Brown were more ardent Americanophiles than most. And Keir Starmer shows every sign of rushing to Washington should he be elected, even if Trump is in charge – much as Theresa May did in 2017, before a humiliating return visit two years later.
The new book is not an anti-American leftist call to arms of the kind published in the 1980s, when Margaret Thatcher’s admiration for Ronald Reagan generated tomes about the UK being the 51st state of America. Vassal State by Angus Hanton (Swift Press) examines for the first time the disparate data showing how much US companies have embedded themselves in the UK, capitalising on our willingness to pay them outlandish fees and subscriptions and afford them the hefty tax breaks needed to keep them in the UK.
We know about the power and influence of Amazon, Apple, Meta/Facebook, Microsoft, Netflix and Alphabet/Google. Other high-profile names include online sellers eBay, Wayfair and Etsy, and streaming companies Sky, Disney and Apple TV.
The internet’s cloud storage is mostly provided by American companies. All our data, bit by bit, is being collected by US firms, whether at the front end as we buy stuff using Amazon or travel using Google Maps, or at the back end, so to speak, as health data is scraped by US spy technology firm Palantir – which is run by Peter Thiel, the co-founder of another US web behemoth, PayPal.
Hanton, a London-based entrepreneur who co-founded the Intergenerational Foundation charity, documents their rise, but also that of less well-known firms which have acquired the UK’s financial and physical plumbing.
A classic example is WorldPay, a payments system used by tens of thousands of UK businesses to process card transactions. Once owned by NatWest, it was offloaded after the 2008 crash to US private equity firms Advent International and Bain Capital for £2bn.
That was a European Commission order that the UK could have ignored but chose to obey. Advent and Bain floated the company on the London stock market for a handsome profit in 2015, but it soon went private again. Another Advent-owned firm, payments processing technology company Vantiv, paid $10.4bn for it in 2018, then Florida-based Fidelity National Information Services (FIS) paid $35bn in cash and shares for WorldPay in 2019.
What ties these firms together is that they offer popular services that somehow we accept should be charged for, without any reference to the cost of production or market influence.
It doesn’t happen on the continent in nearly the same way – and some would probably argue France, Germany, Spain and Italy are the poorer for it. WorldPay executives would no doubt say US companies are big investors, enhancing and expanding the UK businesses they buy, often with a long-term vision. Except that the vision includes domination and control of the economy, holding the government to ransom with threats of cutting investments if tax subsidies are not generous enough or tax rates low enough.
Google’s soon-to-be-opened monster HQ in London’s King’s Cross is emblematic of the way the UK’s red-carpet treatment for investors has profited US companies and offset the threat of an exodus after Brexit. Google has found the UK, unlike the EU, willing to turn a blind eye to its monopolistic practices.
That is great news for Brexiters. It’s not so good for the rest, who, wherever they turn, must pay for the services of an ever-expanding array of US mega-companies.
Source: US Politics - theguardian.com
