UK Economics

What a surprise! Now GlaxoSmithKline announces £275m investment and new jobs as it says Britain remains ‘attractive’ despite Brexit – just weeks after it warned against leaving the EU

  • GSK brushes aside Brexit jitters as it announces £275m into UK sites
  • Fresh investment will go to sites in Durham, Montrose and Hertfordshire
  • It expects new jobs will be created by the extra investment across the UK
  • Just weeks ago GSK urged voters not to leave the EU due to uncertainty

Britain’s biggest drugs company is to plough £275million into its UK manufacturing plants in a major vote of confidence in the country following the Brexit vote.

GlaxoSmithKline – which had campaigned for Britain to stay in the European Union – said the UK was still an attractive location to do business thanks to its skilled workforce and competitive tax system.

Ministers said the investment programme was further proof that there is no better place in Europe to grow a business – even after the vote to leave the EU. Business investment is seen as crucial to the outlook for the economy because it boosts productivity, creates jobs and raises living standards.

GlaxoSmithKline (GSK) has brushed aside Brexit jitters and announced that it is pumping £275 million into its three UK manufacturing sites, dubbing the UK an 'attractive location'

Remain campaigners argued during the referendum campaign that investment would be hit if Britain quit the EU. Glaxo chief executive Sir Andrew Witty was among those warning against a vote to leave – claiming before the referendum that the UK would be ‘much better off inside the EU than outside’.

But Glaxo yesterday said it will now spend £275million updating three manufacturing sites in Scotland, County Durham and Hertfordshire to beef up production of its medicines. The investment is a boost for the 2,750 people who work at the three plants and is likely to see hundreds more jobs created in the coming years.

Sir Andrew, a former business adviser to David Cameron, said the move ‘will continue to underpin a significant presence here in the UK’ for the company.

Before the referendum, the Glaxo boss was among more than 90 leading figures in the life sciences industry to sign a letter that said: ‘Staying in [the EU] would be better for the health and wealth of the UK.’

Brexit campaigners seized on the apparent change of heart and said it was a sign that Britain could prosper outside the EU.

John Longworth, who was ousted as director general of the British Chambers of Commerce after publicly backing a leave vote, said: ‘After Brexit the Government will have to make the UK the best place in the world to do business and we will see again and again companies that were remainers recognising the huge opportunities that Britain provides for business.’

Glaxo, which employs 16,000 people in the UK, said: ‘The company views the UK as an attractive location for investment due to the skilled workforce, technological and scientific capabilities and infrastructure and a competitive corporate tax system.’

Sir Andrew said the investment was ‘testament to our skilled UK workforce and the country’s leading position in life sciences’. He added: ‘Everyone wants to make this succeed and we are going to continue to invest here.’

He said Glaxo had opposed Brexit because of the ‘regulatory uncertainty’ it would create for the sector, but said this concern ‘was not sufficient to get in the way of the decision to invest’.

The company’s investment in Britain gave Theresa May a huge boost as she revealed she has begun preparations for Britain’s ‘orderly departure’ from the EU.

The announcement by GlaxoSmithKline was a huge boost for Theresa May as she revealed she has begun preparations for Britain’s 'orderly departure' from the EU.

The Prime Minister, in Rome for talks with her Italian counterpart Matteo Renzi, said she had chaired the first meeting of a Cabinet committee on exiting the EU and insisted that Britain would maintain close economic links following Brexit. Mrs May was welcomed at the grand Villa Doria Pamphili with a guard of honour and brass band playing God Save The Queen.

She had a 90-minute meeting with Mr Renzi, who said he respected the ‘painful’ Brexit vote.

Mrs May will follow her meeting in Italy with trips today to Slovakia and Poland.

McDonald’s is to create 5,000 jobs in the UK by the end of next year. In a further sign that firms continue to invest despite the uncertainty surrounding Brexit, the fast food chain said it would increase its workforce to more than 110,000.

 GDP grew in build up to the referendum

Chancellor Philip Hammond welcomed the faster than expected growth ahead of the referendum
Chancellor Philip Hammond welcomed the faster than expected growth ahead of the referendum

Britain’s economic growth actually accelerated in the run-up to the EU referendum as industry recorded its best performances for nearly 20 years.

Gross domestic product – the total size of the economy – increased by a better-than-expected 0.6 per cent between the start of April and the end of June.

That was up from growth of 0.4 per cent in the first quarter of the year. It confounded fears that the economy slowed ahead of the referendum.

The FTSE 250 index also rose as high as 17,362 yesterday. This more than reversed the losses made since the Brexit vote – the index reached 17,333.51 on June 23 before polls closed.

The Office for National Statistics, which published the GDP figures, said the referendum had limited effect on the economy in the second quarter and very few companies were hurt by uncertainty.

Industrial production rose by 2.1 per cent in the second quarter of the year – the best performance since 1999 when it increased by the same amount. Production hasn’t grown more strongly since 1988, when it rose by 2.2 per cent in the third quarter.

And in British industry, manufacturing output rose by 1.8 per cent, its best performance for six years, driven by growth in pharmaceuticals and car production.

Chancellor Philip Hammond welcomed faster than expected growth ahead of the referendum.

He said: ‘The fundamentals of the British economy are strong. It is clear we enter our negotiations to leave the EU from a position of economic strength.

‘Those negotiations will signal the beginning of a period of adjustment, but I am confident we have the tools to manage the challenges ahead… this Government will take whatever action is necessary to support our economy’.

Ben Brettell, senior economist at Hargreaves Lansdown, said: ‘There are tentative signs things might not turn out as bad as the doom-mongers predicted before the vote.’

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