Closing summary: AstraZeneca deals blow to Labour growth hopes
In light of AstraZeneca’s decision to pull out of its planned Speke investment, it is worth revisiting this article by the Guardian’s Nils Pratley from August.
That was when Labour’s decision to try to reduce the funding available for the vaccine plant expansion first came out in the open.
The international going-rate for state aid to part-fund a large pharmaceutical facility costing a few hundred million pounds, euros, dollars, or whatever, is hard to pin down. Governments don’t publicise sweeteners and a company’s thinking will be guided by many factors, including the wider tax regime. But a rough rule of thumb, say industry insiders, is a 15%-25% subsidy for capital costs. Singapore has a reputation for being more generous.
Thus, if it is correct, as the FT reports, that Jeremy Hunt verbally offered AstraZeneca £65m towards a proposed £450m vaccine-manufacturing plant in Speke in Merseyside, one could say the last chancellor did OK with 14%.
But it now looks like 14% was too much for Labour.
Any hint of doubt still looks terrible. It also jars horribly with Reeves’s rhetoric about boosting growth, firing up private-sector investment and setting a more stable climate for policymaking.
One could argue that the chancellor is within her rights to revisit her predecessor’s commitments to try to save a few quid. And some may take the view that AstraZeneca, with a stock market value of £200bn, is rich enough to fund its plants itself, noting that a £25m gap would be only a few million less than Pascal Soriot, AstraZeneca’s CEO, could earn personally this year.
AstraZeneca shareholders voted through Soriot’s £18.7m pay package last year.
In other business and economics news today:
Unless the FTSE 100 drops by 1% in the next hour, it is on for its strongest month of gains since November 2022.
A group of 30 Labour and Green MPs have written to Ofwat to demand that Thames Water is taken into special measures.
The head of the UK’s Office for National Statistics has been summoned for a grilling by MPs next week amid concerns the UK’s faulty economic data has become “virtually unusable”.
Apple slightly beat analysts’ expectations in its first-quarter earnings for fiscal year 2025 on Thursday. The iPhone-maker’s revenue rose by 4%, coming in at $124.30bn, barely above estimates of $124.12bn.
UK house prices rose for a fifth consecutive month in January, but the annual rate of growth slowed as the property market showed signs of “softening”, according to Nationwide.
You can continue to follow our live coverage from around the world:
In our coverage of the Washington DC plane crash: 40 bodies recovered; Trump claims army helicopter was flying too high
In the US, Trump says he will impose trade tariffs on Canada and Mexico on Saturday
In the UK, shadow minister Chris Philp’s ‘patronising’ comment about Britons’ work ethic show Tories ‘out of touch’, TUC says
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AstraZeneca’s decision to cancel its investment in Speke is likely to be seen as a major blow to the Labour government.
In a much publicised speech on stimulating growth on Wednesday, chancellor Rachel Reeves said that She Britain’s economy has “huge potential” and is at the “forefront of some of the most exciting developments in the world like artificial intelligence and life sciences”. However, one of the UK’s life sciences champions has now canned a £450m investment.
AstraZeneca, led by chief executive Pascal Soriot, had already said that the investment plan was on pause as it sought increased government funding.
The company had been in talks over “incentives” to support the expansion of its childhood-vaccine factory in Speke in order to turn it into a bigger research and development (R&D) and manufacturing centre across about six hectares (15 acres) where several vaccines could be produced at once.
The investment had initially been agreed by Rishi Sunak’s Conservative government in March last year. However, the Labour government sought to reduce the amount of state aid on offer.
