Wall Street, New York City. Photo Vlad Lazarenko (CC by-SA 3.0).
Britain has been the preferred hunting ground for US multinationals buying up businesses abroad, leading to a serious loss of independence…
Vassal state: how America runs Britain, by Angus Hanton, paperback, 304 pages, ISBN 978-1800753907, Swift Press, 2025, £12.99. Kindle and eBook editions available.
This splendid book is “a call to action to stop further transfers of parts of the economy to powerful and unaccountable American owners and to reset Britain on a course for more economic independence.”
Information from the US Bureau of Economic Analysis shows that one of the most damaging legacies of Thatcher’s 1980s regime was enabling the wholesale transfer of British assets to American owners. Her loyalty to capital resulted in US control of our economy: it was a betrayal of Britain.
And that invitation to buy up Britain, repeated by every government since, has been enthusiastically accepted by Americans. In 1981, only 3.6 per cent of British shares were owned overseas, by 2020 over 56 per cent were.
In his book, Hanton, a British economist, examines this loyalty to the USA. His view, “The consequences could not be graver: impoverishment, loss of autonomy, and a drain on talent and treasure.” The result is that money flows abroad and we lose jobs, opportunities, skills and taxes. We also lose tech sovereignty, as shown when the USA overturned the government’s decision to buy Huawei mobile phone network hardware.
Hanton explains that private equity companies are expert tax avoiders, often evading corporation tax altogether. Over 1,000 multinationals operate in Britain, making up a third of our economy but paying only 1 per cent of the government’s tax take.
Britain’s tax regime makes far greater claims on domestic businesses than on US corporations.
Profits offshored
Foreign multinational subsidiaries pay half the rate paid by comparable domestic companies. We lose more tax from the offshoring of profits than any other country.
Over 80 per cent of UK tax is paid by workers. Less than 8 per cent comes from corporation tax, of which multinationals pay only a small fraction.
Governments fail to collect tax from multinationals, then tell us they can’t afford what we need. For example, from 2019 to 2022 Starbucks declared no profit, and paid no tax on its £1.2 billion of sales. In 2022, Amazon paid no UK corporation tax. Instead it received a £7.7 million tax credit. Finance capital never wants to spend on anything that might benefit the working class.
Between 2000 and 2018 US companies spent £56 billion more on buying British firms than British firms spent across the Atlantic. In recent years this has been by far the biggest route of cross-border takeovers in the world.
Hanton’s book shows that this foreign direct investment only rarely results in new job-creating factories. They are mostly investments in profitable existing businesses and rent-yielding properties.
Over half of all the assets that US corporations hold in Europe are in Britain. US corporations have more employees here than they have in Germany, France, Italy, Portugal and Sweden combined. Two million workers, around 6 per cent of the UK workforce, are ultimately employed by US companies. And they are paid less than French or German workers.
The largest US companies sell over $700 billion of goods and services to Britain, which amounts to over a quarter of our total GDP. The British government spends £30 billion a year on US-made supplies. The Ministry of Defence paid £26 billion to US suppliers between 2011 and 2021, three times as much as any other government department.
US and the NHS
The next biggest spender is the Department of Health and Social Care. A brilliant chapter in the book on “The NHS cash cow” details the growing US involvement in private provision in the NHS, begun by the Labour government in 2002.
Private equity companies, the predominant model for US acquisitions, extract wealth. Hanton reports one study which found that private equity companies cut one in seven staff, cut wages and raised prices in the first two years of buying a company.
‘Over 1,000 multinationals operate in Britain, making up a third of our economy but paying only 1 per cent of the government’s tax take…’
The US 2021 Build America Buy American Act mandated that all iron, steel, manufactured goods and building materials must be produced in the USA. The Made in America Office enforces compliance, to “reduce the need to spend taxpayer dollars on foreign-made goods.” Britain has no such act and no such office.
The impact of President Trump’s government cuts isn’t clear, but the “Buy America” policy isn’t likely to change. So when the Labour government is huffing and puffing over tariffs, it would be well to ask what they are doing to support and promote British industry.
Labour peer Viscount Hanworth told the House of Lords in 2015, “Our rules of corporate governance amount to a system of self-regulation by the financial sector. They create few impediments to mergers and acquisitions or to financial trading and do nothing to protect the national interest. … the failures of our industrial sector are to a great extent due to the power and influence of our financial sector, whose activities are inimical to a long-term industrial strategy.” He criticised the then government for seeing nothing wrong with inward investment.
Little has changed since.
The ruling class and British governments continue to uphold US sovereignty, at the expense of Britain’s economic sovereignty. The current government sees “inward investment” as positively beneficial. This book provides strong evidence about how misguided that is.