July 2, 2024 - 7:00am
This week it was announced that BlackRock, America’s largest asset management company, would buy British data group Prequin for $3.2 billion. What seems like a minor financial news story is in fact part of a growing trend: the Great British Exodus. This trend has two components: the exit of large swathes of the British elite from the country itself, and the selling of the family silver — mainly to America.
Recent data shows that Britain’s millionaires are packing up and leaving. In 2024, 9,500 millionaires are set to leave Britain. This puts the country in second place for millionaire emigration, behind China (15,200) and in front of India (4,300). But when we adjust for population, this picture changes completely. Per 100,000 people, Britain is seeing 14.2 millionaires leave versus China’s 1.1 and India’s 0.3. Something big is happening in the UK.
At the same time as the British elite leave in droves, American firms are snapping up British businesses. It is not just high-level takeovers such Preqin: American private equity firms are snapping up mid-sized British companies that no one else is willing to buy. Meanwhile, financial markets commentators are pushing British business owners to sell their companies to America.
What we are seeing is the final consolidation of the post-1945 settlement in which Britain agreed to be a subordinate partner to the Americans in everything military and economic. Those who challenged the arrangement, such as Anthony Eden during the Suez Crisis of 1956, didn’t get very far.
In the Eighties and Nineties, Britain managed to carve out a place in the world by becoming a major financial centre. But it has long been well-known that the City of London is just an outpost of Wall Street. Since the 2008 financial crisis, the City has waned in importance with more and more British companies being listed on the New York Stock Exchange. Now the financialised British economy is being actively weaponised against the country to asset-strip its companies and place them under American ownership.
Why are the millionaires leaving? The proximate cause is no doubt Labour’s determination to raise the capital gains tax and abolish the carried interest loophole that fund managers use to avoid paying income tax on their profits. But the more important cause is deeper than that: they smell blood in the water. The sense of Britain’s decline is now obvious to anyone.
In reality, Britain accepted the role of number two to America because it had no choice. Now, as America’s own star on the world stage starts to fall, the rats are leaving the sinking ship and returning to the imperial capital — and they are taking with them anything that is not nailed down. The British people do not get a say in the matter, sadly. They thought that their leaders were committed to running a country, but in fact many are careerists who are just looking for the next job.
Philip Pilkington is a macroeconomist and investment professional, and the author of The Reformation in Economics
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SubscribeAny millionaires coming in the other direction, I wonder? Even if it’s just for the London property market? Or is that a net figure of fugitive asset strippers?
A large majority of British workers are employed in small businesses.
If you genuinely wanted growth your policy would be dedicated to creating an environment in which small businesses can grow to become big ones. Yet most of the small business people I know have no ambitions in this direction – it’s too risky and too difficult, the banks are only interested in property and there’s far too much regulation. The utterly pointless GDPR cost £8 billion and there’s more to come.
It can only get worse under the incoming government, none of whose members have ever been to the coalface and all of whom are obsessed with the nonsense of net zero and fashionable identitarian trivia.
It makes perfect sense to get out as soon as you’ve got a bob or two.
As for Rachel Reeves dream of getting the economically inactive back to work. Talented early retirees are hardly going to be tempted by what’s coming. Higher taxes on hard work and success. Ever greater discrimination against employing by ability. More and more regulations and increased costs. Yet more woke brainwashing (aka “training”) in the workplace.
Why work to support any of that ?
The Left never learns from past experience. Harold Wilson’s attack on high earners in the 1970s led to a massive exit of talented people (including the Rolling Stones) and the income they and their businesses generated for the UK, The consequence was a lower tax take for the state. A perfect example of political iatrogenics – the policy outcome being the exact opposite of what was intended.
One of the attractions of Farage’s Reform party (arguably the main one after controlled immigration) is his emphasis on small businesses becoming more productive by reducing, NOT increasing, the tax burden and the mountain of regulatory bureaucracy they have to deal with.
I don’t really see why the acquisition of British companies is generally bad news. I can see why we should be wary of selling off our infrastructure, power stations etc to foreign bidders due to national security/resilience. I can see the argument for resisting the ARM/Softbank acquisition on strategic grounds. But Prequin? It is one of many financial data firms – I work for a rival of theirs and we have been owned privately by the British founders, by other corporates, by PE and now has been taken back private by another (foreign) buyer. We still have a big presence in the UK and pay tax here. Surely having a wealth of private firms that grow big enough to attract American suitors is sign of health, not decline. Not only that but the author fails to mention that the M&A market has been in the deep-freeze since the pandemic and the current wave is probably just a rebound.
Another melodramatic article by Mr Pilkington.
Absolutely.
The Prequin case appears to be a classic “problem of success” (the sort of problems you want). The owners will cash out and reinvest the profits, quite likely in some new business ventures. Someone started a successful UK business and sold it for a huge return. And this is a “problem” ?
And if the UK stock market is undervalued (and it is by relative international standards), then we must expect bargain hunting PE firms to pay us a visit. If we’re too lazy/stupid/whatever to invest in our own companies we have only ourselves to blame (with perhaps a little left over for the government for regulations and taxes like stamp duty which make London less competitive). Never forgetting Gordon Brown’s dividend tax raid – from which the FTSE has never really recovered.
Frankly, Mr. Pilkington has a childlike obsession with supposed American decline and tries to fit every news item to this agenda.
It is not only Brown’s dividend raid. Regulators have driven pension and insurance funds away from equities for the last 20 odd years. They have been driven into poor return government bonds.
Equity funds are notorious for taking over a company and increasing ‘efficiency’ for short term share holder value. However, efficiency often means stripping the company from everything that costs money but also everything that actually makes it run. It seems to me that this is what the Western economy itself is doing as well. Much of big capital doesn’t invest in anything productive and innovative anymore, it plunders through speculation, money manipulation and milking dead capital. That is exactly how we got here in the first place. Actual productive capital and hard assets were already sold off a long time ago. If this is even partly true, these elites are not taking much of actual value with them. This then also begs the question, what is the legitimacy of our financialised economy and these elites exactly?
I don’t doubt that our financialised, rentier economy is doomed and that our NuNu Labour overlords will do worse than nothing to address this, but those millionaire figures are probably a little misleading.
I’m willing to bet that most of those UK millionaires aren’t business persons, they’re London & South East house-owners who’ve decided to cash in on their stupidly inflated house prices and go somewhere they can buy a cheap gaff and live comfortably on the rest of their sale proceeds. And who can blame them – London is a khazi and at least in Thailand, Slovenia or Peru they won’t be further ruining the remaining nice parts of England with their very presence.
Its all about incentives. Britain, (as well as the EU) are so far left that risking capital in new enterprise is irrational. So like California fleeing to Texas (Elon Musk is a tell), British capital will flee to more friendly climes.
I read everything, even FT and Unheard. I dropped FT, it was far to the left of the NYT, so Woke as to be unreadable.
$3 Billion from BlackRock for a firm that is actually worthless and loss making is a pretty good deal! Wonder if it will actually complete by the end of the year or even be another HP/Autonomy fiasco!
It doesn’t take much to be a mere millionaire today. Just sell your home. If you sell it to move to another country, perhaps the one you left to come here, you would be counted as a departing millionaire.