AstraZeneca has abandoned its plan to invest £450m in expanding a vaccine manufacturing plant in Merseyside, citing a reduction in government support.
The pharmaceutical company disclosed its decision just two days after Chancellor Rachel Reeves outlined Labour's strategy to accelerate economic growth.
AstraZeneca mentioned that various factors, including changes in the final offer compared to the prior government's proposal, influenced its decision following "protracted" negotiations.
The Treasury explained that adjustments in the proposed investment structure led to a decrease in the government grant.
A Treasury spokesperson mentioned that all government funding must demonstrate value for taxpayers, and despite extensive efforts, a resolution could not be reached.
Although AstraZeneca will not proceed with its investment plans, the Speke site will continue to produce and supply the flu vaccine without affecting current jobs.
During her economic growth plan unveiling, Reeves praised AstraZeneca as one of the "great companies," expressing her determination to attract investments to Britain.
Shadow business secretary Andrew Griffiths criticized Labour's handling of the deal, stating, "There's no vaccine for incompetence."
The government aims to attract more investments to the UK to create job opportunities, which was initially highlighted by the former Conservative Chancellor Jeremy Hunt in the previous year's Budget.
Hunt described AstraZeneca's decision as an "absolute tragedy" and urged Reeves to directly engage with Sir Pascal Soriot, the company's CEO.
The shift in AstraZeneca's plan coincides with some businesses preparing for tax increases, including a rise in National Insurance rates for employers and a lowering of the threshold for National Insurance payments.
While the Chancellor and Prime Minister are changing their stance on the UK's growth and investment outlook, businesses are concerned about rising costs impacting hiring and growth prospects.