All in the national interest
Much teeth- gnashing over actual and perceived exits from London’s equity markets. The SoftBank decision to opt for New York for the Arm holdings float is causing anguish.
It has long been my view that overseas ownership and New York share quotes lead to the slow erosion of commitment to the domestic market and the national interest.
This was among the reasons why the unchallenged £10bn Schneider takeover of another cambridge-based deep tech firm, Aveva, was so disappointing.
There will never be a durable deep tech sector in Britain if we so easily sell companies born and paid for by the uK.
The tendency is to forget that the great science and tech at stake is a product of our research universities, much of it funded by uK taxpayers.
The Institute of Directors may be indulging in fantasy when it calls for Britain to have a Biden-style Inflation Reduction Act with subsidies for climate change investment. Some response to a form of American protectionism is appropriate.
uS manufacturing has been denuded by the rise of china and East Asia over the last two decades. And there is no way the world’s largest and most sophisticated economy can claim ‘infant’ industry status.
The erosion of uK ownership continues with North Sea oil service and engineering firm Wood Group under siege from private equity giant Apollo.
Yet Russia’s war on ukraine demonstrated that it is unsafe for the West to abandon fossil fuels just yet. Wood may, for instance, have a part to play if and when carbon capture becomes viable technology.
It is as well to remind ourselves that the movement of share quotations, public to private and overseas takeovers of British firms, is not a one-way street.
Office for National Statistics data for the final quarter of 2022 shows that the ambition of uK plc has not been entirely wiped out, with British firms completing £10.2bn of foreign takeovers – up from the previous period and the final quarter of 2021.
Overseas takeovers of British companies often are detrimental, particularly in hightech and life sciences.
But there is no escaping the fact that the uK runs a large deficit on the current account and does need foreign money to balance the books.
Inward investment for mergers and acquisitions tumbled to £5.3bn in the final months of last year. That is £15.9bn less than in the third quarter and £11bn lower than in the same months of 2021.
That amounts to a big post-Liz Truss sell order. It is a stark reminder of Britain’s dependence on the kindness of strangers.
ThE debate about prospects for uK house prices rages on. This is far from academic, in that so much of uK consumption revolves around our homes.
Readings from the Nationwide and halifax indexes are very different, catering to different segments of the market.
So the swing from the fall in prices recorded by the Nationwide, and the rise recorded by the halifax can be perplexing.
It is hard to ignore the 1.1pc rise recorded by the halifax price index in February. The annual 2.1pc rise in prices may be well below inflation but that is not of much relevance given that the surge, in the era of super-low interest rates, outpaced inflation.
The reality is that the much-predicted squeeze on real incomes has been alleviated by the energy price guarantee, the drop in fuel prices, reasonably generous pay settlements and one-off inflation bonuses.
Employment remains robust. Luring back some of the half-million older workers who have dropped out of the workforce looks to be a Whitehall priority.
The main blockage to a return to a healthier housing is higher interest rates. There already is a retreat from the high fixed rates of the autumn and recent noises from the Bank of England have been dovish.
Betting on a housing crash and bargain basement prices is not a good option.
IS the next domino in the crypto universe about to fall?
Silvergate capital, once a modest uS regional mortgage broker, is facing insolvency. It had become America’s go-to bank for crypto currency firms looking to switch freshly mined bitcoin et al into old-fashioned dollars.
Without an escape route there could be a cascade of further failures.
The bubble truly has burst.