8 - The cost of doing business is higher in the UK

Posted on 12 Jul 2007 at 11:18

Verdict: True - up to a point

Companies undoubtedly incur costs in the UK that are greater than elsewhere, and the US in particular, but are they enough to justify our hefty prices? No way, says the LSE: "Yes, it's more expensive to do business here, but it isn't 50%, or more, which is what the pricing suggests," says Grous.

There are regulatory costs to wade through in the UK, as in the rest of Europe, and these push up operational costs, but regulation is a blight in the US as well, especially since new accounting laws were introduced following the high-profile cases of Enron and WorldCom. "We do have higher and higher regulatory costs coming into play, and that's an issue across Europe," says dabs.com CEO Wall. "With the WEEE directive and the Distance Selling Act, we're more aware of these costs, and they probably add 2-4% to our costs, but at least that's the same for all companies in Europe.

"Having said that, listed companies in the US now have a large regulatory problem of their own in the shape of Sarbanes-Oxley."

Even so, there are plenty of factors that add to the cost of doing business in the UK. Rent is higher, as are transport, fuel and building costs, and there's also the minimum wage to consider: around $10 an hour in the UK, but a miserly $5 an hour in America. "If you're a manufacturer then there are costs, such as shipping, but lots of products here are manufactured in Germany or other parts of Europe," says Jenner. "The cost of products is no different, but in the UK everyone wants more money - the cost of living is higher here than in, say, Prague so we need more profit and need to sell more. In Turkey, they work with lower costs and are able to sell cheaper."

Back to 'Rip-off Britain: excuses exposed'.

Author: Stewart Mitchell