Protectionism on the Rise: CBI President Sir John Sunderland Warns of Economic Consequences

Strategic Insights -

CBI president Sir John Sunderland has condemned protectionism within US and continental European economies, accusing the Spanish government of hypocrisy for blocking foreign takeovers while offering tax breaks to domestic companies. Sunderland's verbal assault on lingering protectionism highlighted the growing trend of foreign takeovers of UK assets, with Spanish companies leading the charge. He warned that the attitude of France, Italy, and the US towards free trade is a major obstacle to economic growth, particularly among emerging powers such as Brazil, Russia, India, and China.

Key Takeaways:

  • CBI president Sir John Sunderland accused the Spanish government of hypocrisy for blocking foreign takeovers while offering tax breaks to domestic companies.
  • Sunderland warned that protectionism hinders economic growth, leading to higher unemployment and higher prices for consumers.
  • Foreign companies spent $91.4bn buying UK firms last year, up from $41bn in the previous year, with household names such as O2, Pilkington, and Manchester United being taken out of British hands.
  • Sunderland called on the government to lobby for a level playing field for mergers and acquisitions and to eradicate protectionist behavior wherever it occurs.
  • The European Commission must continue challenging governments which try to protect their national companies and restrict cross-border takeovers and activities.
  • Sunderland warned that outside the EU, developing countries will be brought into world trade markets much more slowly, putting a brake on their economic growth for years to come.

Statistics:

  • $91.4bn: The amount spent by foreign companies buying UK firms last year.
  • $41bn: The amount spent by foreign companies buying UK firms the year before.
  • 47.3bn GBP: The equivalent amount in pounds spent by foreign companies buying UK firms last year.
  • 2007: The year in which foreign companies spent $91.4bn buying UK firms.

Sources:

  • The Times, Tuesday, May 05, 2009
  • PA News, Tuesday, May 05, 2009
  • "CBI president Sir John Sunderland 'scathing' on protectionism," BBC News, Tuesday, May 05, 2009