AstraZeneca cancels UK plant after subsidies cut

LONDON

U.K. pharmaceutical giant AstraZeneca announced that it was abandoning plans to build a 450 million ($560 million) pound vaccine plant, delivering a major blow to the Labour government's plans to revive a sluggish economy.

"Following protracted discussions with the government, we are no longer pursuing our planned investment," planned for Speke in Liverpool, northwest England, a company spokesperson told AFP.

The company cited "timing" issues and a "reduction" in the public subsidies offered by the Labour government compared with its Conservative predecessor.

A source close to the issue told AFP that Keir Starmer's government, which came to power in July, was proposing 40 million pounds in subsidies compared with the 90 million pounds offered previously.

The group already has a factory on the site, which will not be affected by the decision and will continue to produce flu vaccines.

The media called it a snub to finance minister Rachel Reeves, who has tried in recent weeks to reassure companies worried about tax rises on employers announced at the end of October.

Reeves last week announced relaxations of planning rules and deregulation measures to boost investment, as well as backing several investment projects to make the Oxford-Cambridge axis a "European Silicon Valley".

Having already stalled in the third quarter and then fallen in October, the UK's gross domestic product (GDP) rebounded by a less than expected 0.1 percent in November.

The IMF, however, revised upwards in mid-January its growth forecast for the country this year, to 1.6 percent.