Jeremy Hunt has quite a task ahead of him in next week’s budget.
The Chancellor intends to brighten the mood with stilted rhetoric about Britain’s leading achievements in life sciences, deep technology, AI, fintech and much more.
He will do this against the haunted background of Arm, corporate lender OakNorth and troubled data group Wandisco who decide the grass is greener on the other side of the Atlantic.
Challenge: Chancellor Jeremy Hunt intends to lift the mood with stilted rhetoric about Britain’s leading achievements in life sciences, deep tech, AI and much more
This is just the tip of an iceberg. As we learned during the pandemic (no exaggeration). Britain really is a world beater when it comes to biotech, developing vaccines and new medicines.
Many discoveries in the UK turn into start-ups and then race to Stage One approval in the regulatory process. That indicates a chance of success.
Then the fun begins with small biotech companies looking for direct funding and large pharmaceutical companies looking for licensing deals to nail down the new treatments or compounds.
Realistically, this is a hit-or-miss process with only a one in ten chance of success.
Nevertheless, the competition is fierce and, as a biotech lawyer told me this week, you can almost hear the buzz of big science, developed in British universities, heading to Stanford and the west coast of the US right now.
American venture capital is so much more willing to take risks than British financiers. This is a huge shame because, as vaccine hero Kate Bingham has pointed out, the NHS could be a fantastic test bed for genetic treatments, digitalisation, AI and much more.
Many of our better-known growth companies are university spin-outs, including Arm, Aveva, Darktrace and Oxford Nanopore.
It is very good that HM Treasury recognizes this and that the Chancellor has set up a task force to identify ‘best practice’ for turning university research into commercial success.
This appears to be typical Whitehall, with officials, as Bingham has noted, focused on the process rather than the results.
There is, of course, enormous scope for turning university research into a greater commercial success.
This sort of thing is already happening with Russell Group universities such as Southampton. It has created a huge scientific hub where dozens of innovations have turned into businesses.
M&G is trying to be a pioneer in this field through Northern Gritstone. Opened to outside investors for the first time, the £5bn Catalyst Fund is hungry for investment targets.
Tory voices such as Cavendish Corporate Finance’s Lord Leigh argue that if the UK is really to become a beacon for start-up funding, mechanisms such as the tax-advantaged Enterprise Investment Scheme need to be modernized and expanded.
The government is still living in fear of fiscal turbulence after the Truss fiasco last fall.
But the UK can’t get its mojo back without generous tax breaks and a change in defensive domestic investor attitudes towards more venture capital. Leaving it to the Americans should not be an option.
Swiss watch
US regulators are never slow to punish foreign banks. Both HSBC and Standard Chartered have been penalized for money laundering and sanctions evasion in the past.
The problems at Credit Suisse are of a different kind. The Securities & Exchange Commission has acted unusually to prevent the publication of the report and accounts of the troubled bank.
It does not trust the cash flow figures for 2019 and 2020.
The net effect of the errors may not be material, but questions from the main US regulator Wall Street don’t look good.
Earlier this week, the bank’s largest investor, Harris Associates, sold its stake and shares plunged another 5 percent in the latest trade.
The Swiss bank’s goal is to stem the outflow and focus on its asset management skills. The latest events can hardly be regarded as confidence-inspiring.
Survival skills
Nothing is more important to Jamie Dimon and JP Morgan than the white-shoe reputation of the Wall Street lenders.
Turning the tables on former Barclays CEO Jes Staley over his ties to sex offender Jeffrey Epstein, it has clearly decided that some of the allegations and testimonies released, due to court action, are too toxic to let hang.
It is not for nothing that Dimon has been at the top of JP Morgan since 2005, a period that included the great financial crisis.
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