Merck warned on the UK’s attractiveness for investment. Photographer: Michael Nagle/Bloomberg via Getty Images

Merck has pulled out of a planned £1bn London drug research centre in the latest blow to the government’s growth agenda.

The US pharma giant is to lay off 127 staff alongside abandoning the construction project, which had been set to open in King’s Cross in 2027. The firm warned the UK would lag behind the rest of Europe for spending on health research unless it made conditions more attractive to invest.

“Unless a change is made to the operating environment, the undervaluation is corrected, and the investment is put back in the right places, more and more companies will be making these sorts of decisions,” Merck said.

“Simply put, the UK is not internationally competitive.”

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