Unilever, the consumer products giant, has given up on plans to close its London headquarters, bowing to shareholder criticism of a move to simplify its corporate structure.
Good news in the business world. The UK enjoyed another confidence boost today as Unilever, the consumer goods giant behind household products such as Marmite, PG Tips, Lynx aftershave and Surf detergent, which employs 7,300 workers in the UK, announced that it will be abandoning its plans to leave its UK headquarters in London and locate solely in Rotterdam. The decision was welcomed by Greg Clark, the Business Secretary.
The U-turn is a confidence-boosting decision will bolster the government as it tries to reassure commerce of its pro-business credentials, seeking to ease corporate anxieties over Brexit. The 147 year-old Anglo-Dutch company announced its intention earlier in the year to end its 88-year dual governance structure and simplify by relocating out of London. However, it has been dissuaded after a concerted campaign by shareholding bodies including Legal & General Investment Management, Royal London and Aviva to reverse the move.
Remain-supporting parts of the press and the Labour Party sought to capitalise on the initial intention to relocate back in March, with Shadow Business Secretary Rebecca Long-Bailey seeking to score political points: “This is another blow for the prime minister…businesses are quickly losing confidence in this Conservative government.”
It is unwise to throw stones about business policy in the glass house that is the shadow cabinet, especially in the wake of the shadow Chancellor’s announcement last week of his plan for a 10% raid on corporate assets, funnelling business profits to the Treasury.
The Unilever volte face foils yet another attempt to weaponise negative business news stories against the referendum result. The last such example was the Evening Standard’s alarmism in September over entirely normal production rescheduling by BMW.
The irony here is that business leaders rightly seems more terrified of John McDonnell than they are of alterations to the UK-EU trading relationship after Brexit day.
In fact, Unilever itself insists the dispute was nothing to do with Brexit in the first place: the initial decision was several years in the making and reflected a long-term plan for improving efficiency through simplification. Marijn Dekkers, chairman of the company, maintained that the proposal aimed to “unlock value for shareholders by creating a stronger, simpler and competitive Unilever that is better-positioned for long-term success.”
Mirza Baig, global head of governance at Aviva Investors, publicly stated the shareholder’s view that it remained in the interests of both Britain and the Netherlands for Unilever to retain its dual HQ setup. Amen to that.
Britain’s – and in particular London’s – financial credentials are still second to none in Europe independently of its EU membership, and as international investors acclimatise to the reality of Brexit, confidence and investment looks likely to increase. Let’s hope this represents one key reassurance for the economy in a sequence of many more to come.
