The big buyback

This briefing is published in collaboration with Common Wealth as part of our programme of work exploring profits and corporate power post-pandemic.

As the cost-of-living crisis continues to squeeze household budgets, we know that some firms and sectors are reaping significant profits. Companies can reinvest these profits into the economy, boosting the productive capacity of the economy or the skills of their workforce, but some will just pass these profits back to shareholders via dividends or share buy-backs.

New research published as part of a joint programme on profits and corporate power by Common Wealth and IPPR, by Chris Hayes, Senior Analyst at Common Wealth, finds that buy-backs and dividends have seen a marked boost since the pandemic. Companies engage in share buy-backs when they are unable to identify investment opportunities better than driving up their own share price. We make the case that corporate cash is increasingly funnelled back to already-wealthy shareholders at the expense not only of workers, but also of economic growth.

To read the full report, click here.