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US companies are worried that the cost of operating in the UK would rise under a Labour government, making the country a less attractive place to invest, according to the boss of top transatlantic trade association BritishAmerican Business.
“There’s concern about a potential rise in the cost of doing business in the UK,” BAB chief executive Duncan Edwards told the Financial Times, adding that these worries were “absolutely” more pronounced in relation to a Labour government than a Tory one.
The Conservative and Labour parties have been battling to bolster their credentials with business ahead of the general election on July 4, with tight public finances meaning the next government will be largely reliant on the private sector to boost economic investment.
Despite Labour’s pro-business rhetoric and commitment to fiscal responsibility, there was “still a little bit of scepticism” among companies, said Edwards, whose organisation represents more than 400 companies doing business in both the UK and the US such as Amazon, McKinsey and Delta Air Lines.
He added that he had “no evidence” that companies had an overall preference between Labour and the Conservatives. He said he thought a Labour government might make a welcome push to boost trade links with the US under the Atlantic declaration signed by the two countries last year last year to boost economic ties.
Issues making companies “anxious” about Labour include taxation, employment-related costs and regulation in areas such as competition law, he added.
BAB’s members include Microsoft, which clashed with the UK’s competition regulator last year when it initially blocked the company’s $75bn acquisition of gaming group Activision before later clearing an amended version of the deal.
Labour has promised not to raise corporation tax and that the rate could be reduced in future if this was needed to maintain international competitiveness.
Edwards noted that there had been no such commitment in areas such as employment taxes or energy levies.
Labour is also planning an overhaul of workers’ rights, which could increase expenses and reduce flexibility for employers.
Companies making investment decisions would consider not just the absolute cost of doing business in the UK but the relative cost compared against countries such as France, Germany and Ireland, said Edwards.
The UK had some “massive advantages” over other countries and has built up a large base of US companies, he added. “We will be reminding [the next government] of the things that can act as a disincentive,” he said.
He added that concerns over the costs a Labour administration may impose on business were concentrated in the teams that conduct detailed analysis of public policy and the cost of investing in different countries, which are crucial to informing their investment decisions.
The UK election was “not exercising the minds of most [US] CEOs in a big way”, he said. “The US view of the UK election is a bit of a shrug.”
The policy differences between the two main parties in the UK are seen as much narrower than those between Joe Biden and his opponent Donald Trump in November’s US presidential election.