Fears of an exodus of major companies from Britain intensified yesterday after the internet search giant Yahoo! confirmed its decision to move its headquarters from London to Geneva. The US company is understood to want to relocate to Switzerland, where business taxes are much lower than in the UK, to "increase financial performance".
Its decision comes only days after the Budget, in which the Chancellor, Alistair Darling, pushed through changes to the tax system which disappointed the business lobby. Yahoo!'s move will stoke worries that London's standing as the de facto capital of European commerce has been irreparably damaged. Richard Lambert, the leader of the Confederation of British Industry, said: "We are deeply concerned that the UK corporate tax system is becoming uncompetitive and, without knowing the detail, this sounds like another sign of that."
Faced with global financial turmoil and a slowing economy, business leaders have warned the Treasury that, if it reaches deeper into the pockets of large companies, the steady trickle of those opting for more business-friendly climes could become a flood, which would cripple the economy. Nearly a fifth of UK tax receipts come from financial institutions in the City of London. They are among the most mobile businesses and are actively courted by officials from low-tax countries such as Ireland and Switzerland.
Yahoo! is not the first to leave. Kraft, the US food manufacturer whose brands include Vegemite and Toblerone, moved its main office from London to Zurich last year. …