Drug giant AstraZeneca chose the low-tax Republic of Ireland over the UK to build a new $320 million factory, and Chancellor Jeremy Hunt has expressed his "disappointment" with this decision.
The company's chief executive claimed that the site had originally been intended for north-west England, but Dublin was ultimately chosen due to the "discouraging" tax rate.
According to Mr. Hunt, he accepted the company's "fundamental case" regarding business taxes.
But he added that the government would not take into account tax cuts financed by borrowing.
AstraZeneca originally intended to construct its new factory close to Macclesfield, Cheshire, where it already has sites.
The BBC quoted Mr. Hunt as saying, "We're disappointed that we lost this time. And we concur with their main points, which are that we should lower business taxes and make our business tax system more competitive.
"However, the only tax cuts we won't take into account are those that are financed by borrowing because they aren't true tax cuts. They're merely shifting the financial burden to later generations.
"If you look at life sciences, we recently had billion-pound investments announced by BioNTech, Moderna, Merck, and other big pharmaceutical companies," he continued. Having the largest Life Science Center in Europe, we believe we are in an extremely advantageous position.
Corporation tax, which is paid by UK businesses as well as foreign companies with UK offices, is set to rise from 19 percent to 25 percent in April.
The Association of the British Pharmaceutical Industry's chief executive, Dr. Richard Torbett, stated: "There are more stories about losing investments, like the one we've seen with AstraZeneca, than there are positive noise stories coming in, and we really have to turn that around.
The NHS-branded medicines sales levy, which has increased due to rising demand since the Covid pandemic, has drawn the attention of AstraZeneca and other companies in the sector.
"The agreement we have with the NHS, that has gotten to the point where companies are now paying more than a quarter of their revenues - not profit - back to the government," Mr. Torbett said on BBC Radio 4's Today program.
"That is significantly higher than anything the industry pays anywhere else in the world, and we need to get to a point where the UK can compete for investment on an even playing field, and we are not there yet.
The UK is "being undercut mercilessly by the Irish tax system," according to Conservative MP Sir John Redwood.
Sir John is a backbencher MP who supports the Conservative Growth Group's call for a revival of the tax-cutting policies of former Prime Minister Liz Truss.
The possibility of "significant" tax cuts in the March Budget has been cautioned against by Mr. Hunt.
As a result of the economy growing nothing between October and December, according to recent data, the UK narrowly avoided entering a recession in 2022.
The Bank of England continues to predict that the UK will experience a recession this year, which is generally understood to occur when the economy contracts for two consecutive three-month periods.
