London beats Rotterdam as a heavyweight economic centre

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Unilever choosing London above Rotterdam is a massive economic blow for the Netherlands. And a crying shame too, because Unilever is leading the pack in the race for long-term value creation and sustainability. But in many ways London undeniably carries more weight as a global economic centre than Rotterdam.

Not only does greater social security make life more pleasant, it also gets you through a pandemic like this one in better shape Sandra Phlippen Chief Economist ABN AMRO

Unilever is a global player and like other multinationals it holds very good cards in negotiations with countries that are all queuing up to have it set up operations in their territory. One item in these negotiations is tax. After Brexit, London will have to rely more heavily on tax incentives – the ‘sweeteners’ that we’re in the process of dismantling in the Netherlands. In my view, we’ve made a well-considered choice that puts us on track to promote an inclusive society and fair taxes. But what will the price be? What if it drives all the head offices of multinationals abroad?

Let me say here and now that I don’t know the answer to this. What I do know, though, is that there’s more at stake here than just the jobs and tax revenues we’ll lose if companies leave. There are at least two aspects to look at. Firstly, a fair tax system strengthens our position in EU negotiations. We have more bargaining power if we can look other EU countries squarely in the eye during crucial negotiations about money. Secondly, the pandemic has shown that staying steadfastly on track for an inclusive society also brings economic rewards.

But it’s far from certain whether we’re going down that track. We’ve seen in the current crisis that countries lacking a strong welfare state, such as the UK, allowed their economies to take precedence over the health of their citizens for too long. The result: stricter lockdowns that ultimately lasted longer and appear to have caused much greater economic damage. My point is this: not only does greater social security make life more pleasant, it also gets you through a pandemic like this one in better shape.

Our government made a different choice for the Netherlands – it made our collective health the highest priority. This choice was made easier by the fact that we know the meaning of good health. The standard of our health care service is so high that even the elderly and chronically ill enjoy relatively good health and demand no less from politicians. Many elderly and chronically ill members of our society aren’t a burden on the economy, but active contributors to it. Of course this means that we have to continue to work as long as possible and don’t spend longer than necessary in the social safety nets. But a society where it’s every person for themselves, where the weaker members are set aside so that the fit can continue to work, results in a society where there’s not much to smile about and ultimately not much money to be earned either.

Losing Unilever is unquestionably painful, but we need to stay on our inclusive path. It’s just a matter of time until the best knowledge workers start asking their head offices to choose us again. Wait and see.

Every week, Sandra writes a newspaper column for daily newspaper AD (in Dutch only), which can also be read here.

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