Corporations must prepare for interventionist politics
High-revenue but low-tax-paying tech companies could be targeted as the government mollifies voters with interventionist politics, says Merryn Somerset Webb.
I wrote here recentlythat the coming election is to be one of the most important of our lifetimes. Not because of Brexit, but because of the shift I expect it to represent in the social contract.
We know that electorates are demanding more in the way of action of all sorts from their politicians. And we know that, thanks to the insane levels of public debt, very little of that action can consist of spending more money.
That means that we are likely to see an increasing number of policies that are interventionist that purport to improve things for "ordinary" people without troubling the public purse along the way.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
So we have suggestions that utility bills should be capped. We have Theresa May planning for her manifesto to include tough rules to prevent "irresponsible bosses" taking whopping pay packets or dividends even as their pension schemes slowly go bust. And we have murmurings about somehow capping executive pay.
It is all part of a general trend that, as we have long pointed out, is going to see a change in the generally supportive environment for large corporations operating in the UK and possibly for the high-revenue but low-tax-paying tech companies in particular.
If you are in any doubt about this, look at yesterday's papers. The Times led with the headline "Social media giants fail to tackle hatred, say MPs". The BBC ran a similar headline but skipped the "say MPs" bit. Yes, the once loved "do no evil" social media kings are suddenly out of favour. Google is accused, in the Select Committee report on the matter, of having "profited from hatred."
Along with Twitter, YouTube and Facebook, Google has failed to tackle terrorism, violence and hatred online. These companies are "among the biggest, richest, and cleverest in the world", and their failure to fulfil their social responsibility to deal with extremism is "a disgrace," "shocking," and "shameful". The state, says The Times "must step in if these internet giants will not face up to their responsibilities to publish responsibly,regulators must make them".
It is hard to disagree with any of this. But it does represent a shift in the way the government looks at social media firms. There are numerous mentions of how rich/profitable/high-revenue the firms are in the report (that they have profited from terror makes the whole thing "more obscene") along with fury that they have allowed state-funded ads (for universities, charities and the like) to appear around terror videos.
May has often said that her government will step in where capitalism isn't working ie where the profit motive gives us bad rather than good results. Can a significantly firmer approach to corporate tax collection from the social media sector or a system of very high fines for offenders be far behind?
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
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.
-
Christmas at Chatsworth: review of The Cavendish Hotel at Baslow
MoneyWeek Travel Matthew Partridge gets into the festive spirit at The Cavendish Hotel at Baslow and the Christmas market at Chatsworth
By Dr Matthew Partridge Published
-
Tycoon Truong My Lan on death row over world’s biggest bank fraud
Property tycoon Truong My Lan has been found guilty of a corruption scandal that dwarfs Malaysia’s 1MDB fraud and Sam Bankman-Fried’s crypto scam
By Jane Lewis Published
-
House prices to crash? Your house may still be making you money, but not for much longer
Opinion If you’re relying on your property to fund your pension, you may have to think again. But, says Merryn Somerset Webb, if house prices start to fall there may be a silver lining.
By Merryn Somerset Webb Published
-
Prepare your portfolio for recession
Opinion A recession is looking increasingly likely. Add in a bear market and soaring inflation, and things are going to get very complicated for investors, says Merryn Somerset Webb.
By Merryn Somerset Webb Published
-
Investing for income? Here are six investment trusts to buy now
Opinion For many savers and investors, income is getting hard to find. But it's not impossible to find, says Merryn Somerset Webb. Here, she picks six investment trusts that are currently yielding more than 4%.
By Merryn Somerset Webb Published
-
Stories are great – but investors should stick to reality
Opinion Everybody loves a story – and investors are no exception. But it’s easy to get carried away, says Merryn Somerset Webb, and forget the underlying truth of the market.
By Merryn Somerset Webb Published
-
Everything is collapsing at once – here’s what to do about it
Opinion Equity and bond markets are crashing, while inflation destroys the value of cash. Merryn Somerset Webb looks at where investors can turn to protect their wealth.
By Merryn Somerset Webb Published
-
Value is starting to emerge in the markets
Opinion If you are looking for long-term value in the markets, some is beginning to emerge, says Merryn Somerset Webb. Indeed, you may soon be able to buy traditionally expensive growth stocks on the cheap, too.
By Merryn Somerset Webb Published
-
ESG investing could end up being a classic mistake
Opinion ESG investing has been embraced with enormous speed and zeal. But think long and hard before buying in, says Merryn Somerset Webb.
By Merryn Somerset Webb Published
-
UK house prices will fall – but not for a few years
Opinion UK house prices look out of reach for many. But the truth is that British property is surprisingly affordable, says Merryn Somerset Webb. Prices will fall at some point – but not yet.
By Merryn Somerset Webb Published