Key UK Economic Advisor Warns Against Foreign Takeovers of British Firms

Andy Haldane, a prominent economic advisor and former chief economist at the Bank of England, has issued a strong warning against the increasing number of foreign takeovers of British companies. Haldane, who is advising Greater Manchester Mayor Andy Burnham, stated that Britain cannot afford to continue losing its innovative businesses to overseas investors, describing the trend as an "exodus" that jeopardizes future growth and jobs.

"We simply cannot afford to allow the continuation of overseas stripping of our greatest growth asset, innovative businesses, on this scale," Haldane said. "Doing so is tantamount to willingly sacrificing growth and jobs and productivity of tomorrow."

This concern comes as notable firms like airline Easyjet and warehouse giant Segro have recently faced takeover bids, leading to accusations that the London stock market has become a "hunting ground" for foreign entities. Haldane cited figures indicating that Britain has lost over 100 listed companies with a market capitalization exceeding £100 million since 2024, including 20 this year, four of which were from the FTSE 100 index.

He further highlighted that approximately 1,700 high-growth firms have been lost over the past 15 years, representing a £1 trillion loss to the economy. Haldane stressed that this rate of loss is unsustainable for the next 15 years.

Reforming Investment and Taxation

At the British Chambers of Commerce (BCC) annual conference, where Haldane serves as president, he outlined proposals to address the issue. He noted that a significant number of the UK's start-ups face a "death valley" in securing funding to scale their operations. A contributing factor, he explained, is that only about 5% of the £9 trillion in UK household financial assets are invested in British companies.

Haldane pointed to the substantial tax relief provided for pensions and ISAs in the UK, totaling £50 billion for pensions and £10 billion for ISAs annually – an amount that exceeds the defense budget. He argued that these benefits are currently provided without any requirement to support British businesses or contribute to UK growth. This situation arises because the UK is unique among pension systems globally in lacking a "home bias" for investments.

He proposed that pension funds should be invested in UK firms by default, and tax relief on savings could be redirected to support domestic businesses. Haldane emphasized that incentivizing investment in the UK would not represent a radical departure but rather a necessary step to foster national economic health.

Haldane urged the government to act with "speed and scale" to support domestic innovators before they are either lost or acquired by foreign buyers. He called for "boldness of thinking" regarding tax policies to achieve this objective and ensure that Britain capitalizes on its homegrown talent and companies.