There is something different about this latest round of takeover activity. It used be that American corporations, buoyed by a strong dollar and boundless confidence, scooped up unloved British assets and turned a proud headquarters into a branch office.
This time around, the boot is on the other foot. Despite efforts to clamp down on so-called tax inversions, headquarters are coming to the UK or Ireland, even if the workers are not. President Obama failed to win support in Congress to clamp down on an exodus of American companies seeking to save millions from a lower corporate tax rate. The added draw is they can begin releasing billions in cash accrued overseas that would be heavily taxed on its return to US shores.
The latest example this week is the merger of three Coca-Cola bottlers, where the resulting company is choosing the UK as its home. The pharmaceuticals industry is also reorganising itself through a series of billion-dollar deals that will put tax domicile anywhere but Stateside.
All this should be good news. One measure of a country’s global influence is the number of headquarters it houses. The UK, led by London, already does pretty well. A Deloitte survey found last year that two in five of the 250 largest companies in the world with a main or European headquarters have it in London – five times as many as pick Paris, the region’s runner-up.
A cluster of corporate decision-makers attracts talent and boosts the broader economy. The critical mass of companies boosts those who serve them, such as bankers, accountants and lawyers.
With corporation tax falling again, to 18 per cent by 2020, Britain becomes even more attractive. Having made conditions ideal for these companies to nail a brass-plate to the door of a room somewhere handy for the airport, we need to establish what more the UK can derive from them.
The time is right for business leaders and politicians to dream about what kind of economy the UK should strive to be a generation from now. It must be more than one full of jet-set companies that feed demand for airlines and office developers, but contribute nothing towards skills and training.
The guessing game on rates will go on just the same
The Bank of England’s “super Thursday” was predictably not as super as many had hoped. Sure, the idea of removing a drip-feed of data and replacing it with interest-rate decision, Monetary Policy Committee minutes, quarterly Inflation Report and the rest is a sound one. But it promises to remove one guessing game – during the two-week gap between a rate decision and the Bank disclosing how it made it – with another. Now that there could be a data vacuum for longer, the clues rate-setters bake into set-piece speeches will be combed over more closely. That poses a problem, if the indications from Mark Carney’s Lincoln speech are anything to go by.
To lift hopes of an approaching interest-rate rise only to dash them again gets us back into “unreliable boyfriend” territory. The trouble is that when the Bank of England Governor and his colleagues vote to turn on the interest rate taps, they know that the momentum of these things will lead to more than a single 0.25 per cent rise.
For all the signs that the UK is faring better, the economy is still fragile. And for all the warnings that the only way is (eventually) up for rock-bottom loans, borrowers and small companies stand to be caught out.
Can an industry adapt to the decline of television families?
The Great British Bake Off was a rare event – a programme that even the BBC’s enemies concede the corporation does well, and one of those moments when people gather around the television to watch a live programme.
There are fewer and fewer of them. Accenture’s annual survey of viewing habits showed that young viewers are leaving TVs to gather dust in the corner of the living room. It is a generational thing. Only the over-35s prefer TV screens. They are becoming obsolete for sports and music – genres that lend themselves to video clips – but they are holding up better for long-form content such as movies and drama.
The same trends can be seen in news consumption. TV remains a powerful medium but is in decline. The annual digital news report, produced by the Reuters Institute for the study of Journalism and Oxford University, found that in the US fewer than a third of under-45s now watch a scheduled TV bulletin, compared with 42 per cent two years ago. It is a similar story in the UK: 46 per cent now, down from 56 per cent in 2013.
Smartphones eclipsing laptops as the favoured route for going online is only the beginning. Some work by Enders Analysis found that British smartphone users spend 32 minutes a day online on their phones. That usage is increasing at a rate of 10 per cent a year. With the simultaneous growth in users, Enders estimates that the total time spent online via smartphones will have more than doubled by 2020 – that equates to more than 15 billion hours.
The lesson we have learnt from print industry changes is that the best brands serve consumers wherever they go.
Can the TV industry be quite so flexible? The trouble for broadcasting giants such as Disney, whose boss Bob Iger this week mounted a stout defence of cable TV, is that the move to smaller screens could well herald smaller profits too.Reuse content