The defensive stocks under fire

When governments need cash, they go where the money is, says Merryn Somerset Webb – to the tax-dodging multinationals.

"US companies warn tax avoidance crackdown will hit earnings." That was the headline on the front of the Financial Times last weekend. It seems that 136 large US firms have had to alert investors to the possibility that efforts by global governments to clamp down on aggressive tax avoidance are likely to hit their net profits. We started warning you a few years ago that this would happen. When countries need money, we said, they start showing firms what it means to be sovereign. When they need money, they go where the money is and at the moment, it's on corporate balance sheets.

So last year, the UK introduced its diverted profits tax, a 25% tax on contrived arrangements designed to avoid paying corporation tax here. Linkedin, Facebook and QLogic have all cited this as a risk. This year, George Osborne has announced that tax breaks on interest costs are to be cut. That, says the FT, will shave £1bn a year off corporate profits in the UK alone.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.