For a company to be British, does it need to be owned by Britons?
The number of column inches devoted to the London Stock Exchange and the approach by Australia’s Macquarie Bank is perplexing. It is not as if a takeover of the institution that runs our exchanges and provides the services that make ourstock markets work effectively would make much difference would it?
I don’t think so. Yet for many, the prospect of such a “bastion” of the UK’s financial system being owned by “Johnny Foreigner” is enough to make their crust-less cucumber sandwiches curl at the edges.
For years, British companies have been bought by foreign investors. In many instances, we don’t think about it and the net result doesn’t affect our lives. World leaders are meeting in Davos where, despite the crate loads of champagne and abundance of canapés, a real debate will be going on. How can we understand globalisation and what does it mean for our economies?
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The globalisation of our markets is a necessity unless we believe our island is self supporting. To operate in the global market we, as a nation, have to be on the world stage. Companies and industries operating here must have the financial muscle to compete in this global marketplace.
It is regressive to think that companies must be British - a psychological issue. What is more important is whether or not a company, its workers and the nation at large will benefit from such deals. Do you think that Jaguar would still be in existence if it had not been sold to Ford? The recent injection of £1.2 billion of fresh capital into the luxury car maker is testament that we need foreign, cash-rich, owners to invest where we Brits could not, or would not.
In 1987 Rowntree, the manufacturers of such fine products as Kit Kats, Rolos, and Smarties went public. In 1988 they were taken over by Nestle and there was uproar that such a British company could possibly go under foreign ownership. But for a few errors in judgement – not much has changed. The company received massive investment and still makes a lot of the products here in the UK. So has this takeover changed our lives? Not one jot.
What about real estate? Does it matter that Morgan Stanley’s Real Estate fund took Canary Wharf Group private last year and bought RBS’s development portfolio? Or that vast swathes of the City of London and West End have foreign owners? It is not as if they can pack the buildings up and take them elsewhere, is it?
Shareholders in public companies receive dividends. If a company is bought by a foreign owner, then profits get siphoned off abroad. But is that really any different from now? Many British companies have shareholders from all over the world. Would it be a problem if British Airways was, for example, German-owned?
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British Airways is just a name and a brand we associate with Britishness. It does not hold much strategic difference who owns the company. What is more important is that as a country we have good access to and from our airports and as customers that we have a choice of carriers that we like and more importantly have the capital to invest in safety, technology creating profits for shareholders. It is purely a psychological issue.
In a global marketplace one needs global reach. So, thinking with an island mentality is both blinkered and unrealistic.
Britain is well-placed in the world order. It is more important to have reasons for people to be here; to live, work, visit and do business. That means having a skilled workforce, sensible tax regime, user friendly legal structure and an economy that is vibrant.
So, quite frankly, I don’t care who owns the London Stock Exchange, and nor should you. We would be much wiser to spend our time scrutinising the government’s plans for education reform, ensuring we have a proper social and physical infrastructure and good prospects for economic growth. These will be the keys for maintaining and developing our position in the global marketplace.