Britain’s investment exodus and the slow death of animal spirits
The merger of Anglo American with Teck and Ineos’ halt to UK investment highlight a deepening crisis of confidence in Britain’s business climate, with critics blaming government policy for driving companies and capital overseas, says James Price
The dwarves of Moria may have dug too deep in The Lord of the Rings, but the British mining industry is suffering from the opposite problem. A giant of the mining sector, Anglo American, is no more; following a merger with Canadian company Teck, it will be known as Anglo Teck.
But with a painful irony, despite the name the headquarters of this new company will leave Britain, and its office here will massively shrink as the leadership relocates to Canada. Understandably, this has led the shadow business secretary Andrew Griffith (one of the painfully few parliamentarians to understand big business) to call this: “a clear signal that companies and investors are losing confidence in the UK and voting with their feet.”
And this follows on the back of Stuart, Lord Rose saying that Britain sits “at the edge of a crisis” and Jim Ratcliffe’s company Ineos announcing that it is ceasing all investment in Britain, with the Manchester United co-owner saying that Britain’s “unstable fiscal regime” is the reason why. All investment will move to the United States, where industrial gas costs five times less than it does here.
Blast furnances go cold
A superb X account called @Object_Zero_ has even pointed out that Ineos bought something called the ‘Forties pipeline system’ which is the main pipeline through which British North Sea oil is pumped. This announcement, of no further investment, might start a chain reaction and ruin the whole sector. Mr Zero likens it to the last blast furnaces going cold. Which is, incomprehensibly, exactly what Ed Miliband and the lunatic green lobby want.
It would be wrong to blame any of the companies mentioned here; the mining deal will create a copper market giant and save more than three quarters of a billion dollars after a few years, and Ineos have complimented the United States on their stable energy investment strategy.
The blame lies, squarely, with the British Government.
Contrast this with the United States. At the recent All In Podcast ‘summit’, a who’s who of politicians, business leaders and thinkers from across America met this week. Adena Friedman, the CEO of the NASDAQ stock exchange boasted on stage about the health of the American investment world.
The moment that stuck in the craw for me most was when Ms Friedman talked of her familiarity with Rene Haas, CEO of ARM Holdings, the semiconductor company, and how she has enjoyed chatting with him backstage.
This familiarity is due to her successful efforts to convince ARM, long considered the jewel in the crown of the British tech landscape, to launch its IPO solely in America, rather than jointly with London. This was one of many slow-moving crashes I saw in a very brief stint in the Treasury, but it sums up how abject Britain has been as a place for big, exciting businesses for too long.
What to do about this? Rather than screaming into the void, the answer is actually quite simple – elect politicians who understand that capitalism is human, and creative, and beautiful, and moral and not what the left thinks of it; extractive or zero sum. Alas, the left are not the only people who need to be taught anew the beauty of free enterprise. The civil service is also full of people whose instincts tell them that business is bad, profit is something to be gobbled up to pay for state spending, and who cannot see the corrosive impacts of this approach for decades.
As investment dries up, and more ambitious builders leave, the burden on the rest of us grows, further reducing living standards and productivity, ushering even more investment and people in a calamitous cycle. This could be catastrophic.
In Atlas Shrugged, Ayn Rand compared the drive of an industrialist to “run a mine…and defy the whole world for the sake of his new metal” to the same sacred fire that burns within poets and musicians. Rand’s love of industry, and the human capability to create is inspiring, whether you agree with the rest of her philosophy or not. Now though, people will have to look elsewhere for that kind of muse, for the once-rich seam of inspirational figures is running dry in Britain. And it will take a blast furnace of energy to get it going again.