BAB welcomes Alastair Borthwick of Bank of America and Sean Doyle of British Airways as our new Board Chair and Vice Chair.
BAB launched its Annual Policy Agenda earlier this month after much work with the members of our Policy Steering Committee and various sub committees. You can read the conclusions of our work and see the ideas that we will be developing by following the link here, but I can summarize our thoughts as follows. We want the US and UK to follow pro-growth, pro-business policies that create a globally compelling and competitive environment in which to invest, work and compete. We continue to advocate for the benefits of international trade, especially between likeminded allies and we are arguing for policies that create an affordable and reliable transition to a lower carbon economy. And, given the reality of the geo-political tensions, we make an argument for extending the transatlantic leadership position that the US and UK have in defense and aerospace.
The concept of ensuring that the UK and US are both attractive and rewarding places for businesses to invest should not be controversial but over recent years there has been growing concern that the cost of doing business in the UK has been rising for international firms. And given that US companies are by far the largest cohort of investors in the UK, this really matters. So, the language of the incoming Labour administration was very welcome to the business community. Talk of creating a world-beating environment for business, a pro-growth government and targeting the fastest growth rates in the G7, are ideas that would naturally find support from a trade organization like BAB.
But whilst the ideas are encouraging, the reality looks like it might be rather different. We will save our full analysis until after the budget on October 30th but the signaling from the government and from economic commentators is that taxes are going to rise… again… and that capital gains, employer National Insurance, inheritance tax and higher rate income tax thresholds are all possibilities for where the increases will be targeted. If you think that international tax competitiveness is an important factor influencing Foreign Direct Investment, then the latest report from the Tax Foundation will be sobering reading.
At the same time, the UK’s long held reputation, amongst American businesses, as having a relatively flexible approach to employment, is being undermined by the new Employment Rights Bill. And finally, the UK has one of the highest wholesale costs of energy for businesses in the region, a critical input cost for many companies along with people, and we have not heard much about how this disadvantage might be addressed.
As I have said repeatedly, the UK has a great track record of attracting inward investment from US firms going back decades. Events like the recent investment summit, delivered in fewer than 100 days after the election, show just how much this matters to the government. And the fact that more than a third of the £63bn of investment announced at the summit is from US companies speaks to just how important this relationship is. We know that there are lots of natural and acquired advantages that support the instincts of many US bosses to want to locate capital and people in the UK, but these have to be backed up by cold, hard financial logic. It is no good talking about growth in the UK as the overarching agenda, if by the action it takes, the government makes it more expensive to operate there.
In Washington last week to talk about our Policy Agenda I heard directly contradictory views about the outcome of the US election. The only thing that pundits agree on is that the Senate will switch to Republican control, but the races for the House and the Presidency are incredibly close. For what it’s worth, my own view is that the compounding effect of inflation on mainstream living standards over the last four years will end up being the decisive issue, with Trump winning.
Whether you are rooting for a Trump or Harris Presidency, and BAB as an organization has no party-political affiliations, if it doesn’t go the way you hope, our sense is that it won’t be the end of the world that some commentators are predicting. Radical changes in policy are hard to deliver under the US system where the checks and balances on presidential power are real. The contrast with the UK, where Sir Keir Starmer’s majority of 157 seats gives him the power of a King, is stark!
Both possible administrations will be hawkish on China and instinctively protectionist with their own versions of America First economic policies. That said, on tax, trade (and a range of foreign and domestic policies beyond the remit of BAB) there are some real differences for the US voter to choose from.
BAB has a busy autumn program for its members which you can see on our events page here and I hope you will be able to join us for one or more of these events.
And for those of you who weren’t able to join our AGM earlier this week I would like to take the opportunity to thank Gavin Patterson on completing two years as our Board Chair for his leadership and advice. We are grateful to Gavin and delighted that he will stay engaged as a member of our Advisory Board. At the AGM, the Board confirmed the appointment of a new leadership team with Alastair Borthwick, CFO at Bank of America, moving up from Vice Chair to Chair and Sean Doyle, Chairman and CEO of British Airways, joining the Board as Vice Chair. We are lucky to be able to attract such high-quality individuals, representing iconic American and British companies, to our Board and I am looking forward to working with them both; one way or another, there is a lot to do!
