Vassal State E-Book

Angus Hanton

• Herausgeber: Forum
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 395

Veröffentlichungsjahr: 2024

Beschreibung

'Provocative and detailed ... Excellent' The Telegraph 'Shocking and meticulous' Danny Dorling 'An eye-opening revelation ... a must-read' Joel Bakan THE TELEGRAPH BEST BOOKS OF 2024 British politicians love to vaunt the benefits of the UK's supposed 'special relationship' with the US. But are we really America's economic partner – or its colony? Vassal State lays bare the extent to which US corporations own and control Britain's economy: how American business chiefs decide what we're paid, what we buy and how we buy it. US companies have carved up Britain between them, siphoning off enormous profits, buying up our most lucrative firms and assets, and extracting huge rents from UK PLC – all while paying little or no tax. Meanwhile, policymakers, from Whitehall mandarins to NHS chiefs, shape their decisions to suit the whims of our American corporate overlords. Based on his 40 years of business experience, devastating new research and interviews with the major players, Angus Hanton exposes why Britain has become the poor transatlantic relation – and what we can do to change it.

Leseprobe

Contents

Introduction: My Search for Facts

1 Thundering Herd: Charging into All Corners of the Kingdom

2 Grim and Grimmer: Welcoming the Buyers

3 Island of the Tech Giants

4 A Slice of Everything: Payments, Publicity and Platforms

5 Life-as-a-Service: The Twin Treadmills of Subscriptions and Debt

6 Private Equity: The Extraction Machines

7 Why You Cannot Milk an Eagle

8 The NHS Cash Cow

9 Suppliers of Choice to HM Government

10 Consequences: Why Does US Dominance Matter?

11 The American Way

12 Puppet Masters

13 The Ultimate Challenge

Acknowledgements

Notes

Introduction

My Search for Facts

Thirty years ago, I got lucky: I bought a single share in an investment and insurance business called Berkshire Hathaway. It cost me $3,000 and I did it just to get some information. In the foggy days before the internet, only those people listed on the Berkshire Hathaway share register received the accounts and the annual letter from chairman Warren Buffett. Half philosophical reflection, half market report, these letters have acquired a kind of mythical status in the business world, in part because Mr Buffett is an insightful man but also because, since I bought that single share, the value of Berkshire Hathaway stock has risen, not just a few times but by a factor of 170, so that, by the end of 2023, it had grown in value to half a million dollars. I have been passionate about understanding business and investment my whole life and my purchase was a welcome accident, really – I was just trying to understand how Berkshire Hathaway worked.

Mr Buffett’s success is a stark illustration of US capital at work – taking calculated risks, buying businesses in profitable sectors and determinedly growing wealth. His approach has not changed in more than half a century, but the US economy has. In the past 15 years, it has been impossible to ignore how three great American commercial forces have become truly massive in their scale and riches: big tech, private equity and US-based multinational corporations. And a basic, obvious question has continued to press on my mind: how much of the UK’s economy is now US-owned?

Originally, I believed such a simple question would be well understood by the British government, and so – because I am nosy – I filed a volley of Freedom of Information requests asking about US corporate muscle here. Simple stuff, but the answers were anything but straightforward.

I started with big state spenders – looking for the value of US contracts with the Ministry of Defence (MOD) and the NHS. Both admitted they do not analyse their vast spending by the nationality of the companies supplying them. I approached the Office for National Statistics (ONS) in Newport, South Wales, and asked how many UK workers are employed by US corporations. They said that they do not record even this basic data, but, without irony, they offered to put together a guesstimate for me based on figures from Dun & Bradstreet, a Florida-based information company. On the phone, the ONS official expressed with pride that he subscribes to this service – costing $40,000 a year – and said that other government departments cannot justify such cost. Even so, the ONS admitted its estimate of ‘about 1 million’ was too low, as it would not include the tens of thousands of ‘self-employed’ Uber and Amazon drivers, or the delivery workers on platforms supplying takeaway food. Conservative analysis, as we shall see, suggests the true figure is not 1, but 2 million Brits who are ultimately working for American bosses.

What I really wanted was trade data, total sales figures between the US and UK, and I recalled that Britain, along with other Western governments, had started to collect exactly that information. In order to protect tax revenues, the national tax authorities had required all multinationals in the Organisation for Economic Co-operation and Development (OECD) to reveal their accounts on a country-by-country basis. So, I wrote to HMRC’s Freedom of Information department in Newcastle, asking for the turnover, profits and taxes paid by the larger US companies. Their team replied categorically, and somewhat puzzlingly, that they did not have that data. But a few months later, after my persistent questioning, they replied: ‘Please accept our sincere apologies for the confusion caused by our first response. We confirm we do hold the requested information.’ My excitement was short-lived, however, because they then stated that they would not be sharing what they knew, explaining that such secrecy ‘ensures a safe place to consider policy options in private… There is a strong public interest in protecting against encroachment on the ability of ministers and officials to develop policy options freely and frankly.’ I was shocked that, although officials at HMRC had, eventually, admitted that they do hold this basic information on US corporations, which had been gathered at taxpayers’ expense, and which affects how much tax everyone else has to pay, they were still point-blank refusing to share it.

Then, in a fortunate break, one of the HMRC officials must have sensed the absurdity of this because he quietly gave me a vital tip-off: he pointed out an obscure page of the website of the US Internal Revenue Service (IRS) where the Americans themselves had already published all the information I was looking for, and that the British were at such pains to protect. It was, and is, a treasure trove of data and, for anyone who reads columns of numbers as a hobby, it is a full-blown, marmalade-dropping eyebrow-raiser. The IRS had listed the total sales made by the big US corporations to every country around the world, together with their profits and any tax they paid. And it included sales to the UK and how these compared with the American footprint in other European countries. It also listed the enormous sums US multinationals were routing through tax havens such as Luxembourg, the Netherlands, Switzerland and Ireland.1

These revelations led me to the idea that other useful statistics might be ‘Made in the USA’, suggesting that it would be sensible to check a range of US sources to see if the UK has been singled out for economic capture. Sure enough, Washington’s Bureau of Economic Analysis (BEA) showed something that the British statisticians cannot. The BEA proves that Britain has been overwhelmingly the preferred hunting ground for US multinationals buying up businesses abroad.2 The figures imply that the US has placed 30 per cent of all its overseas investments into the UK. In summary, it is clear that the invitation to buy up Britain, first extended by Margaret Thatcher in the 1980s and reiterated by every prime minister since, has been enthusiastically accepted by Americans. What are the consequences?

One answer comes day by day from the British media. Much of the key writing has been done by journalists like Alex Brummer (the Daily Mail), Ben Marlow (the Daily Telegraph) and Phillip Inman (The Guardian), who describe the consequences of the sell-off of large UK companies. The Financial Times has been a close follower of the exploits of US private equity in Britain, with implicit warnings contained in articles by Daniel Thomas, Peggy Hollinger, Harriet Agnew and Kaye Wiggins. And Stephen Glover (the Daily Mail) has asked the essential question about what happens when critical authority over strategic assets is placed into the hands of billionaire tech titans – as is the case with Elon Musk’s Starlink internet provision in Ukraine. What’s striking is that the concerns about US economic power over the UK and the world cut right across many domestic political differences.

The rest of us can see the outlines of the problem: our high streets and small businesses are under pressure, crushed by slick, US-dominated online competition and a tax regime which makes far greater claims on domestic businesses than on US corporations. Most of our digital infrastructure and even our principal system of exchange – card payments – are overwhelmingly US-owned. And, increasingly, British consumers are paying a royalty to US businesses on most transactions, moving from one-off purchasers to renters and subscribers, who slog away on payment treadmills for the benefit of shareholders on the other side of the Atlantic. The consequences could not be graver: impoverishment, loss of autonomy, and a drain on talent and treasure.

The shape and extent of US economic power in the UK is, for all this, something Britain avoids discussing in the round. The term ‘big tech’ is usually used to describe ‘US tech’. When reference is made to ‘private equity’ there is a strong chance it really means US private equity. Talk of a ‘multinational’ means, more often than not, a US multinational. But we do not discuss the US hold over us in economic terms even if we sense we are constantly dealing with US companies. Politicians rarely discuss it save to talk about a ‘special relationship’ and a ‘partnership’, but, as we shall see, the facts are routinely misrepresented in British political statements about Anglo-US relations. There could be a reason for that: after all, what does a ‘partnership’ really look like when one side is the mightiest superpower in the history of the world and holds an overwhelming stake in the other’s economy?

Perhaps the answer is not to look too closely – and Whitehall does not. There comes a point, though, when you have to. I think we are past that point, for obvious reasons: if the companies that control Britain’s growth and success are ultimately accountable to a much greater authority than Parliament, the actions of London politicians will be increasingly irrelevant. A totally subordinate Britain will make a poorer and more irrelevant partner for the US, as well as Europe, something that will matter most of all in the coming century, when the challenges we face require global action, be they climate change or, more immediately, the defence of democracy against authoritarianism in Russia, China and elsewhere.

The essential case of this book is not a rejection of all American values or of democracy or of the carefully negotiated and sustained alliances that defeated fascism in the 1940s and secured peace in Europe and in many other places in the aftermath. It is not about a mythical ‘evil empire’. On the contrary, the US state has defended many decent values that the UK took centuries to create. Instead, what matters most in this story is business, not politics. It is companies like Apple and Amazon, private equity ingenuity and corporate muscle that have conquered Britain through innovation, determination and sheer size. So what follows is a nuts-and-bolts examination of the choices that have set British businesses back while making the US richer, and an analysis of Britain’s appalling failure to confront the reality of dealing with a superpower ally with a dynamic and innovative commercial approach that has outmanoeuvred and outperformed its junior partner. This is a call for a new conversation from the one led by politicians apparently obsessed with presenting a false prospectus about Britain’s economic prowess, its role in the world and the path to prosperity. And it is also 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.

Behind it all hangs the gravest risk, one that we rarely consider: what could happen to the UK if the US were ever to break with the values shared between our two countries for the past century? How robustly could British policy-makers respond, for example, to a second Trump presidency that turned its back on the rule of law, worked much harder to erect trade barriers, shrank NATO and promoted ever closer relations with the Russian dictator Vladimir Putin at the expense of Ukraine?

Consider this: there are two countries with close political, economic and military ties, founding members of a defensive military alliance; each is the other’s principal trading partner and they share a common language, even if there are notable differences. The senior partner controls a significant percentage of the junior partner’s domestic businesses, and while the junior partner is occasionally critical, it relies on the senior partner for much of its economic growth, its defence and its geopolitical muscle. I am, of course, describing the relationship between Belarus and Russia. Angela Merkel called Belarus a ‘vassal state’; US Secretary of State Antony Blinken likened it to ‘a client state’. The principal difference between that relationship and Britain’s with America is that Britain still controls its own democracy. For how long will that matter if the bulk of British businesses and enterprises are owned by another country, while the bulk of products and services we buy are also supplied by that country?

This book collates evidence that numerous levers of control over Britain have already moved across the Atlantic. The UK, it turns out, chose to ‘take back control’ from Europe in 2016 while meekly passing ever more economic power to another continent entirely. Are the politicians Britain elected ready to address all this? Far from it. As we shall see, a tour of the economy suggests a thundering herd has just charged in…

1

Thundering Herd

Charging into All Corners of the Kingdom

Like many expeditions this one starts in the supermarket. The smell of fresh bread is piped through the air conditioning and the lights are calibrated to raise appetites and lower inhibitions. Subconsciously, we shoppers are being manipulated to make quick choices and spend as much as possible. And, even in the age of online shopping, British enthusiasm for supermarkets is undimmed. We visit around 70 times a year, spending an average of 43 minutes on each shopping trip. Even though the number of products in the typical supermarket has grown from around 7,000 to more than 40,000, we think we have a pretty good idea about what is on sale.1 We are proud of our cosmopolitan tastes for international cuisine, as well as valuing home-grown British staples. But inside these buildings that we depend on there is a hidden history, and secret origin stories for many of the goods we know so well. You won’t always find the clues on the labels: on the contrary, those may give you a misleading impression. As for what you think you have always known about your favourite brands: things have almost certainly changed. To find the facts about the packages, tins and bottles, you have to look closely and ferret around.

Start with breakfast. The cereal shelves are stacked high with household names, brands that tell us how we should see ourselves at breakfast time: Ready Brek (‘Get up and glow’), Alpen (‘Breakfast at its peak’) and Weetabix (‘Incredible inside’), all feeling as British as they come. On the back of the Weetabix packet a statement declares it to be the most popular cereal in the UK and a royal warrant shows that it is ‘by Appointment to HM the Queen’ – an endorsement of good health and longevity, which will apply equally when the endorsement is changed to ‘HM the King’. But there is no clue about who owns the brand. With the help of two of our American friends, an iPhone and Google, we can establish that all three of these brands are in fact owned by Post Holdings of Missouri. Next to them there are rows and rows of boxes from Kellogg’s, of Battle Creek, Michigan. Their name is not hard to find – perhaps because the owners of the ‘Special K’ brand supply over a third of the UK cereal market. Then we spot some old favourites which we suspect are American: Cheerios and Honey Monster Puffs – and the tiny print on the back tells us they are owned by General Mills of Golden Valley, Minnesota. At least there is the reassuring sight of own-brand cereals, which are less expensive even if they do taste remarkably similar. That should not be surprising, because a bit more research reveals that they are often produced by the same companies. The Weetabix-owning Post Holdings, based in the US Midwest, reportedly also makes many of Tesco’s and Asda’s own-label brands.2

In the confectionery aisle there are chocolates and sweets from Cadbury of Bournville, the UK’s market leader. An online search confirms it is fully owned by Mondelez of Chicago. That Illinois company also owns best-selling brands Milka, Oreo and Toblerone. Dozens more sweets come from Mars, Incorporated of Virginia, which owns Wrigley, Galaxy and Maltesers. Their products are also entrenched in other sections of the store, with Uncle Ben’s rice in the ready-to-cook food, and in pet food too Mars is the pack leader, owning both the Pedigree and Whiskas brands.

The soft drinks section is a head-high celebration of plastic and sugar, where Pepsi and Coca-Cola are way ahead of locally owned brands and sell far more than just colas – PepsiCo owns Tropicana and Quaker Oats, while Coca-Cola owns Fanta, Sprite, Dr Pepper and Innocent. Atlanta-based Coca-Cola also now owns the brand that itself makes a virtue of secrecy with its slogan ‘Schhh… Schweppes’. Their advertising plays on a long-standing myth in which the ‘housewife’, or ‘homemaker’, and the US brands are in cahoots to present food as home-made rather than processed, just like the oven-ready croissants and cookies from the Pillsbury Company of Minnesota.

Next aisle: cleaning, washing and sanitary products. Although there are still some large UK suppliers, such as Unilever, this sector is dominated by Procter & Gamble (P&G) of Ohio and Colgate-Palmolive of New York. Some of their brands are upfront about their US connection, such as Colgate toothpaste, which is seemingly packaged in the American flag and even squeezes out in red, white and blue stripes. The ownership of others is kept obscure, perhaps allowing many shoppers to mistake Fairy Liquid for a British brand when it is really owned by P&G. Kimberly-Clark of Texas cleans up financially in toilet paper and paper tissues, with its market leaders Kleenex covering 60 per cent of its market, and Andrex taking 30 per cent of the toilet paper spend.3 Millions of households spend over £1 each week on the product made famous by the Labrador puppy.4 The nappies section is filled by Huggies and Pampers: only careful examination shows that these brands are from Kimberley-Clark and P&G, respectively.

While strong branding makes Kimberly-Clark tissues and nappies profitable through a combination of high margins and repeat business, there are dozens of other American-owned market leaders. For example, British women spend £3 billion every year on tampons. P&G stands out, with its Tampax Compak and Pearl brands being favoured by 6 million users. Boots UK Limited, formerly Boots the Chemists, whose ultimate headquarters are in Deerfield, Illinois, sells its own-brand tampons to another half a million customers, and together the US companies have 60 per cent market penetration in this sector.5 In personal care and perfume, Estée Lauder of New York has a profitable niche, and Dr. Scholl’s of Boston has a virtual monopoly in footcare products, allowing it to charge whatever price the market will bear.

Right across the supermarket, strong brands are a sure way to extract profits. The American businessman Charlie Munger, discussing the early days of the legendary US corporation Berkshire Hathaway, said: ‘Originally we didn’t know the power of a good brand. Over time we just discovered that we could raise prices 10 per cent a year and no one cared.’6

As we shop we look behind the labels and discover that companies like Mondelez and Kraft Heinz, both based in Chicago, are harnessing scale in marketing and distribution to keep out locals and, where necessary, buy up successful competitors. Many argue that this leads to higher prices, more limited choice and increased packaging.

The US food companies are well aware of the power of sugar, salt and fat, and are adept at harnessing the consumer’s addiction to these. In October 2022 rules were introduced to stop large supermarkets strategically placing unhealthy items near checkouts to make a ‘suggestive sell’ to queueing customers. Mike Tattersfield, chief executive of Krispy Kreme, has said he will find other ways to promote his products and asserts that his customers can easily be trained to look for the doughnuts in different places. He knows that doughnuts sell: ‘I don’t see the world changing to kale cake for their break… it’s not that much fun to share.’7

The dominance of big US food continues as we wander through the aisles: General Mills of Golden Valley, Minnesota, makes Green Giant products, Yoplait yogurt and Häagen-Dazs ice cream – which leads us on to the chilled- and frozen-food cabinets. Here we find plenty of chicken, the UK’s favourite source of protein: research shows that half of it is produced by US-controlled agribusinesses. The biggest of these are Pilgrim’s Pride of Colorado and Avara, largely owned by Cargill of Minnesota. Between them these two companies raise 550 million birds each year for the UK market, equivalent to an American-owned chicken for each UK household every 18 days.8 Pilgrim’s Pride is also the largest pork producer in the UK.9

Arriving at the checkout you might notice that your shopping is being scanned by machines from NCR Voyix, formerly National Cash Register, of Atlanta, Georgia. You will almost certainly pay through an American company – Visa, Mastercard, Amex, Google Pay or Apple Pay. Even if you are that rare shopper still using cash taken from a ‘hole in the wall’ or ATM, there is a two-thirds chance it came from a machine made by NCR.10

Punch-drunk with the pervasiveness of US businesses, we can’t help wondering whether the rest of Britain is equally American-owned and, if so, how much it all adds up to – but to find out more we leave the comfort of the supermarket.

Step into the high street for a cup of coffee and the choice is limited: we spot three US chains – Starbucks, Caffè Nero and Costa, now a subsidiary of Coca-Cola.11 Together these chains have more than 4,500 branches, selling hundreds of millions of drinks each year. It fits the pattern of much American commerce in Britain in being a high-margin business. Through bulk-buying, the cost of the ingredients and a paper cup for our coffee has been driven down to about 30p, while the product sells for £3 or more. Many outlets are selling for more than 12 hours a day and 7 days a week. Other high-street chains, such as Boots with its 1,900 branches, are highly profitable but, like Costa and Morrisons, are not widely recognised as US-owned. Whether hiding behind long-established British brands or openly American, US businesses have a direct relationship with the British shopper and they own dozens of chains now well established in the high street. Across the UK our high streets are hosting many American-owned chains, such as Pizza Hut, McDonald’s, KFC, Gail’s Bakery, Majestic Wine, Taco Bell, Nike, Gap, TK Maxx, Abercrombie & Fitch, Timberland, Foot Locker, Levi’s, Costco, Subway, Hotel Chocolat, Waterstones, Ralph Lauren and Sweaty Betty. In other European countries, the US presence is far, far smaller.

Online shopping and delivery

Once home from shopping and realising we have forgotten something, we go online. Most likely we will be buying through Seattle-based Amazon, whose sales now make up more than 30 per cent of all UK online commerce. Of this total, 60 per cent of what is badged as being from Amazon is, in reality, from third parties using the ‘Amazon marketplace’.12 The US giants don’t just build their own powerful market positions across the economy: they have become the controllers of the ‘platforms’ and ‘pipes’ through which everyone else’s goods and services are delivered. Owning the route to market allows companies such as eBay or Taskrabbit, both based in the San Francisco Bay Area, to make chunky ‘toll charges’ year after year.

After we have placed our online order, we will expect speedy and reliable delivery, and very likely that will come from one of the US companies – FedEx, UPS or XPO – who together have more than 15,000 lorries and vans in the UK. All three enterprises have grown fast, turbo-charged by Covid-19, which prompted an upward lurch in home shopping. These three have expanded by buying up their rivals, taking over TNT, Lynx Express, ANC and Kuehne + Nagel’s UK operations. They exploit economies of scale and are indispensable to the large corporations, which need a single, trusted supplier so that they can track their goods precisely. This demand for accurate and real-time data on deliveries is squeezing out smaller local companies, who cannot afford to set up such systems. Any remaining locals are mostly ‘bottom feeders’ picking up scraps of low-value business. During the Covid period, one of the few remaining independent carriers, Hermes, which delivers more than a tenth of all UK parcels, was snapped up by Advent, a private equity company from Massachusetts, and the carrier was renamed ‘Evri’.13 With all this extra stuff being shipped to us we might want to use self-storage, and maybe go to the world’s biggest self-storage company, Public Storage of California, which controls Shurgard, a market leader in the UK. In other forms of storage, Iron Mountain of Massachusetts is easily the biggest UK supplier to the £1 billion-a-year paper-archive industry, but the most rapidly growing form of storage, data in the ‘cloud’, has no British suppliers – that market has been sewn up by the US tech giants.

Entertainment

After the business of shopping is finished, we watch an on-demand video service, most likely from one of the US media giants: Disney, Netflix, Amazon Prime, Apple TV or Now/Sky. The biggest, Netflix, has almost 17 million UK subscribers – historically invoiced every month from the Netherlands, taking advantage of low tax rates.14 The others are all growing strongly too: during the Covid period 60 per cent of consumers signed up for a new streaming service. Alternatively, we might play computer games, along with two-thirds of the population. Gamers are almost equally likely to be men or women, and gaming is such big business (more than £7 billion a year) that in the UK it generates twice the revenue of the combined income from the music, movie and theatre industries.15 On the other side of the screen from the gamers, the majority of suppliers are American, including Microsoft, Apple, Amazon and Epic Games of North Carolina. Their software engineers make games which are highly addictive, and players have to pay extra for ‘in-app purchases’, so although an initial purchase may be for only 60 per cent of a game, extra features will cost more. One outstanding company in the sector is Steam, based in Bellevue, Washington State, which created the best place to find new games. Thousands of creators add more than 14,000 new games each year and generate a handsome royalty for the company.16 It is almost the perfect business model: with no physical delivery needed, no development costs and worldwide reach, the business produces a torrent of cash. So, like many other US companies in the UK, it has become the indispensable marketplace where buyers and sellers meet: the toll bridge over which all must cross. And, in common with hundreds of US companies operating in the UK, they pay minimal tax: historically Steam’s sales have often been routed through Luxembourg.17

Or perhaps we are tired of games and want to go to a real event, for which we get out our laptop, probably made by Dell of Texas or Apple of California, and find we have received an email from Mailchimp of Georgia inviting us to sign up through Eventbrite of San Francisco. We get the confirmation email back via Google’s Gmail or Microsoft’s Outlook. Indeed, their programs have become so entrenched that many of the UK government’s own online forms offer no option except to make submissions on Adobe or Microsoft products (from San Jose, California, and Redmond, Washington, respectively); signing of documents often demands the use of DocuSign (San Francisco) or one of the handful of its US competitors. This entrenchment of programs extends to complying with HMRC’s ongoing paperless project, ‘Making Tax Digital’, with the result that there is no realistic alternative to using US software. In the larger market of business software, 90 per cent comes from the US West Coast and, to use it, UK companies spend more than £20 billion annually. Putting this in perspective, that equates to more than £700 a year for every British household.

Our whistle-stop tour of the consumer economy has shown us just how wide and deep US ownership has become. As we have seen, it is often well hidden behind traditional British brand names. The public may think of Arsenal FC, Liverpool FC, Everton FC, HP Sauce, Terry’s and Trainline as being British, but in fact the owners of these companies are based in Missouri, Massachusetts, Florida, Pennsylvania, Illinois and New York, respectively.

A walk around the City of London

Ignore the big brands for a minute, though, and look at the fish. The atrium of an office block in Bishopsgate in London’s financial district is overshadowed by a giant aquarium. The tank sits behind the concierge desk and measures 13 feet high and 65 feet wide, and holds 1,200 fish, all collected from the Great Barrier Reef in Australia.18 Two permanent staff feed the fish and there are three part-time divers who clean the rocks and the inside of the glass tank. This gigantic immoderation is a picture of marine life but also a glimpse of how profoundly powerful US money has become at the centre of the City of London.

To proclaim their power and wealth, the owners, Salesforce (of San Francisco), also renamed the building ‘Salesforce Tower’, having bought the rights from the developer, a Massachusetts company, Boston Properties, Inc. Salesforce.com are leaders in ‘big data’ as well as having the biggest private aquarium in Europe. One of the many applications of Salesforce’s software is for managing savers’ funds – another industry being shaped by the American model. Until recently, investors entrusted their funds to money managers, who would pick which shares they thought might rise and charge an annual fee whether they succeeded or not, and on average their performance was, well, pretty average. In response, a pioneering organisation, Vanguard Group, of Pennsylvania, proved that most investors will do much better if fees are kept very low and the money is simply invested in ‘tracker funds’ which follow the market. This idea has triumphed, with the result that Vanguard, along with BlackRock (New York) and State Street (Massachusetts), has become a leading firm in the City of London, and by 2023 they were managing worldwide funds of more than $20 trillion. To put that number in context, it is much more than the value of all the assets in the UK, including all property, shares and businesses.19

Walking around the City we see the shiny headquarters of the US banks who have moved in: Goldman Sachs, JPMorgan, Morgan Stanley, Wells Fargo, Citigroup and Bank of America. They offer what UK banks cannot: a one-stop shop of banking services across the world and balance sheets to finance giant loans for multinationals. Such borrowing is the ‘secret sauce’ of US capitalism because it magnifies reasonable earnings into abundant profits. A company making a return on capital of 10 per cent a year can often use borrowing to double the return on the owner’s capital to 20 per cent – or more. Indeed, borrowing, for most companies, is non-optional – if they don’t borrow they are likely to be taken over by someone who will ‘gear up’ using borrowings to increase profits.

Another area where these US banks have taken control is simply looking after customers’ assets, that is, being custodians. Whereas this was once mostly a matter of having a strongroom for share certificates and jewellery, it is now a highly profitable, multi-trillion-dollar industry with sophisticated record-keeping, and hundreds of nominee companies with clever security and encryption. Worldwide, the six biggest financial custodians are all US firms, led by Bank of New York Mellon – together these Wall Street institutions have custody of almost $100 trillion of assets (equivalent to $14,000 for every individual on the planet). UK banks have been sidelined by these corporations, who process documents more efficiently and whose fortress-like balance sheets inspire savers’ confidence.

Not far from Salesforce Tower is Lloyd’s of London, which once dominated the insurance market, with wealthy individuals acting as ‘names’ standing behind the underwriters, but it all went horribly wrong in the 1980s and 1990s. US courts held insurers fully responsible for the damage caused by asbestos, pollution and smoking. Lloyd’s ‘names’ were required to pay up and Lloyd’s of London was almost wiped out. Big insurance companies, many of them US-based, moved in. The American Insurance Group (New York), Aon (Chicago) and Berkshire Hathaway (Nebraska) have each taken big chunks of the London insurance and reinsurance markets.

Many of the offices we see around the City of London have been quietly rebadged after the occupants were taken over, such as Jardine Lloyd Thompson, a large insurance broker bought out by Marsh McLennan of Chicago in 2019. Another takeover, in late 2021, was of Vectura, a maker of inhalers, bought by the cigarette company Philip Morris International, and mostly owned by US shareholders. This acquisition was breathtaking: a company creating the biggest threat to pulmonary health bought out a company offering remedies.

Such deals are just the culmination of a 20-year period of transatlantic takeovers: between 2000 and 2018 US companies spent £56 billion more on buying UK firms than UK firms spent across the Atlantic.20 In recent years this has been by far the biggest route of cross-border takeovers in the world – and this flow is in addition to the organic growth of the US companies.21

Moving away from Salesforce Tower to the heart of the City, we reach the offices of New York lawyers Kirkland & Ellis, Latham & Watkins and White & Case: there are 16 US legal firms in the UK with annual revenues of more than $100 million and much of their work is for US corporates who prefer to employ the same firm to work for them in different jurisdictions around the world. The US lawyers’ determination and power is clear: in order to drive growth, they have been heavily outbidding local law firms to get the best talent. In 2023 they were offering some newly qualified lawyers starting salaries in excess of £160,000.22

We then leave the ‘City’ itself and move on to London’s West End, where we find a cluster of large management-consultancy offices. US management consultants also pay top dollar to recruit the best graduates, the biggest three being Boston Consulting Group, Bain (also based in Boston, Massachusetts) and McKinsey, the oldest and largest of them all. Everyone knows that McKinsey’s spiritual home is Boston, its birthplace, but in order to remind people of its size and worldwide reach its website claims: ‘we do not have a “headquarters” in the traditional sense.’23 Together, these three, nicknamed ‘MBB’, charge more than $30 billion a year for their advice and a good chunk of that is to the UK government and UK companies.

The West End is also home to the giant advertising agencies – including Omnicom and Interpublic (both of New York) – servicing the big US companies expanding in the UK, such as Apple, Ford and Marriott, who usually opt for single suppliers. In the West End we naturally move on to that most English of spots, Berkeley Square, where the US ‘private equity houses’ are centred: Blackstone is on the square, and the second-largest private equity company, KKR, is just next door in Bond Street, with its new 60,000 square feet of offices. Nearby, off Tottenham Court Road, a third US private equity giant, Apollo, has even bigger offices. These are the three leading companies buying up British industry, and for each of these New York firms the West End of London is just a place for their regional office. It is becoming clear that the true financial capital of the UK is located on Manhattan Island.

Our safari of businesses operating in the UK also confirms that ‘data is the new oil’ and US corporations are at the well heads.24 This is most apparent in the enormous quantities of data collected by each of the ‘big five’ tech companies which are customer-facing (Meta/Facebook, Apple, Microsoft, Amazon and Alphabet/Google – collectively known as ‘MAMAA’), but there is more to it than that. All the big US companies are gaining an advantage by amassing data, as never before, about their customers and their markets. Data capture is often commercially decisive, as shown by the market for information on genealogy, which is a very widespread UK hobby. The leading operator, Ancestry.com, sells access to its vast database of family trees, and sells kits for analysing DNA – using your saliva they can accurately locate where your ancestors lived and will link you up to relatives you didn’t even know you had. Ancestry.com’s business is a leading example of the power of ‘network effects’, because the more people their database captures the more essential it is for new researchers to use their system. Every new person who asks for a DNA test is not only paying £79 to spit into a plastic test tube, but handing over their data and reinforcing the company’s market position.25 As testing becomes cheaper, more effective and more popular, the value of the business increases and the company’s iron grip over the UK’s genetic data becomes ever stronger. Ancestry.com was taken over by New York’s Blackstone in 2020 for $4.7 billion, and such takeovers are a key part of US corporate expansion. And, consistent with the way such companies usually behave, they sell their testing kits into the UK through Ireland, thereby avoiding UK corporation tax in the process.26

US firms control hundreds of business niches and often their biggest advantage over local firms is that, having developed a product in their large home market of mainland USA, extra sales to the UK are a very lucrative bonus. Apple has developed a smartphone which is sold in the US for $1,000 (dollars) but the same phone is sold in the UK for £1,000 (pounds), about 25 per cent more expensive and even more profitable.

A drive out to the countryside

You might think that US ownership ends at the city’s edge, but as you travel out into the countryside with a careful eye, the situation does not change. The estate-agency boards on the M1 advertise sweeping new warehouse developments. These ‘to let’ signs carry the nondescript acronyms ‘JLL’ and ‘CBRE’, representing the UK’s two biggest real-estate professionals, Jones Lang LaSalle of Illinois and Coldwell Banker Richard Ellis of Texas. Together, these two commercial agencies generate £2.5 billion in fees each year – mostly recurring income from revaluations, property management and rent reviews – and have the lion’s share of the commercial property market. It leaves the locals, with their much smaller ‘for sale’ boards, mostly chasing domestic house sales for low, one-off fees.

Once into rural Britain, we immediately find ourselves giving way to farm machinery, such as tractors being driven between fields. These are big machines, leaving us in no doubt that the countryside has been industrialised. Helpfully, we can track the manufacturers of Britain’s 10,000 tractors through the government’s long-established register, and we see that Massey Ferguson (Duluth, Georgia), John Deere (Moline, Illinois) and Case IH (Racine, Wisconsin) supply 50 per cent of the British farm machinery market.27 However, this also demonstrates the patchy nature of Britain’s data collection. Although tractor ownership is logged there is no central analysis of who owns the fields. When we pass a farm with ‘Copella’ signs on it a Land Registry look-up reveals that it is ultimately owned by PepsiCo. Although ownership of individual farms can be looked up, the Department for Environment, Food and Rural Affairs makes no record nationally of how much farmland is owned by, for example, the US drinks companies.

Similarly, American brands have big positions in the combine-harvester market and in earth-moving equipment through Caterpillar (Deerfield, Illinois). Most machinery deals, as with car sales, involve a finance element and US suppliers offer loans which drive sales as well as creating a profit stream of their own. They also lock the farmer into buying a single brand and usually having their machines serviced and insured through the same company. But equipment for farming is undergoing a new revolution: automated machinery controlled by satellite navigation, satnav, is combining with clever software and more productive seeds to change how the land is used. In some farms in East Anglia, for example, giant unmanned machines, using US-supplied satnav, work the fields day and night. The market leaders here are Trimble of Colorado and AGCO of Georgia. One farmer told me that combine harvesters clear the fields one day; other machines work the fields during the night, and by the time the sun rises the new crop is planted and growing: ‘No drivers are needed, and no sunshine wasted because of the US technology we’re using. Drones, AI, satnav and weather forecasting are all working together – there’s nothing comparable being developed in Britain.’

What we can’t see on our visit to the countryside is that parts of British farming are now under existential threat: young people are moving away from meat and more than 30 per cent of millennials are moving towards plant-based diets.28 This has stimulated the development of factory-produced proteins, which are already being widely used for ingredients by US outlets McDonald’s, Subway and Hard Rock Cafe. The new suppliers are led by two Californian companies: Beyond Meat of Los Angeles, and Impossible Foods of Redwood City. Both are well beyond the start-up phase, with investors betting that, despite a dip in the sector in 2023, creating proteins in factories will eventually take lumps of the food market away from the farmers altogether.

When farmers do sell their produce, they deal with one of the handful of low-profile commodity companies who process, store and sell on to the food industry. The international players dominating this sector are often referred to as ‘ABCD’: Archer-Daniels-Midland (ADM), based in Illinois, Bunge, based in Missouri, Cargill, based in Minnesota, and Louis Dreyfus of France. In the UK, it is two of the American firms who are in control, ADM and Cargill, with ADM annually buying about $2 billion worth of British farming output to sell on.29 Processing and distributing has always been a steadier, more profitable business than being the actual grower, as it requires less capital, is less competitive and prospers through good harvests and bad. This particular duopoly, like other pairs of dominant actors, does not fight pointless price wars. The illusion of competition is there, but in reality it is a cosy, complementary and profitable coexistence that keeps out any new entrants. Let us indulge in a thought experiment in which two ice-cream vendors are deciding where to position their ice-cream vans on the beach. If the beach front is 100 metres long, the ideal outcome for customers is if each van is positioned 25 metres away from each end of the beach so the longest distance any buyer has to walk is 25 metres. But in a free market it doesn’t work out quite like that. The space in the middle, between the vans, is attractive to each vendor and they will progressively move their ice-cream van towards the centre. By doing this they can capture more of the market, so that in the end they will be back-to-back in the centre of the beach – far from ideal for the customers near the edges. Cargill and ADM are not alone in making their offerings very similar, and represent just one of dozens of competitive partnerships dominating their markets – such as Coca-Cola and Pepsi, Burger King and McDonald’s, Oracle and Salesforce, Android and IOS, Intel and AMD, Visa and Mastercard.

Lastly, when the farms we drive past need fertilisers, they will very likely be buying from CF Industries (Illinois), which holds a dominant position in UK fertiliser production.30

Into the industrial heartlands

Heading to the Midlands, we reach more territory where US companies have been rapidly expanding. In the last few years those firms whose offices we saw in London’s West End – Blackstone, Apollo and KKR (all based in New York) – have swooped in and taken ownership of dozens of large warehouses and distribution centres to profit from the rise of online retailing. In 2021, Blackstone also spent more than £1 billion buying St Modwen Properties, the brownfield-land development company. The private equity pack is also colonising unglamorous industrial sectors: in waste management KKR spent more than £4 billion in 2020 buying Viridor, which has local council contracts across the UK, and in industrial gases Air Products (Michigan) and Praxair (Connecticut) are both dominant operators. Long-established US manufacturers have also been increasing their UK footprint, such as 3M, originally the Minnesota Mining & Manufacturing Company, which annually sells about £650 million worth of manufactured goods into the UK.31

Jetting off on holiday, and looking at the UK from above

The usual attempts to leave the UK will find more US operators. At the airport we have a 40 per cent chance of flying on an aeroplane made by Boeing (based in Seattle and Chicago), but even if we take a European-made Airbus the engines will most likely be made by Pratt & Whitney (Connecticut), General Electric (Massachusetts) or CFM (Cincinnati), who together produce 80 per cent of the world’s commercial jet engines.32 The aviation fuel will be supplied from Fawley, the UK’s biggest refinery, owned by ExxonMobil. It turns out that three Texas-based refiners, ExxonMobil, Valero and Phillips 66, process more than 60 per cent of the UK’s oil, making petrol, diesel, airline fuel, tarmac and feedstock for dozens of other markets.33 One example from ExxonMobil’s refinery at Fawley is the supply of raw materials for Dow Chemical Company (Michigan) to make antifreeze and agricultural fertiliser.

When you scratch the surface of almost any UK industry you find US ownership – but you also find US enterprises creating the toll bridges which consumers have to cross to find suppliers: Airbnb for accommodation, eBay for second-hand goods, Etsy for handmade products, Tinder or Bumble for dating, and Amazon Marketplace for everything else. As a result, the British constantly have to pay royalties to access their home market.

Raw numbers on the US

Official numbers quantify this brutal story. The combined effect of rapid US company growth and aggressive takeover activity is laid bare by those statistics from the IRS referred to in the Introduction. Collected as part of a larger project to protect US tax revenues, these figures reveal how Britain has been singled out. Of all the assets held by US corporations in Europe, over half of them are in the UK – and that is true even though the IRS defines ‘Europe’ widely: as the whole of the EU, Eastern Europe, Russia and Turkey. It is confirmed by the numbers of workers: US corporations have more employees in the UK than the number they have in Germany, France, Italy, Portugal and Sweden combined. Measured by sales, the largest US companies sell more than $700 billion of goods and services to the UK, which amounts to over a quarter of the UK’s total GDP.34