Sadly, Trade Minister is right that UK businesses do better in foreign hands | Philippe Inman
British companies perform better under foreign control, according to Trade Minister Gerald Grimstone.
“All of our research shows that companies investing overseas in the UK are more productive… they generate more jobs than UK companies, they generate more intellectual property and they export more”, he told the BBC.
This is why, he adds, the British should not be afraid of foreigners taking over even more of our biggest companies.
It became a problem after a flurry of deals involving big British names, including the Morrisons supermarket chain. Recent figures show that overseas buyers have spent more to acquire UK listed companies in the past eight months than in the past five years combined.
Unfortunately, Lord Grimstone is right about foreign companies. Research indeed shows that our most productive firms are Japanese, US and German owned, especially in the area most amenable to productivity measures – manufacturing.
And Grimstone knows all about selling British family money. As a senior civil servant in the early 1980s, before starting his journey to the City and serving on the boards of banks and insurers, he was the architect of Margaret Thatcher’s privatization program and the sale of 22 public enterprises.
Grimstone is promoting an international trade conference to be held on October 19. As a showcase of Liz Truss’ plans to make the most of Brexit and launch ‘Global Britain’, this will be an important moment.
However, the success of foreign companies raises the question, why has British managerial culture remained second-class?
Forty years of privatization and an open door to foreign competition were supposed to improve the situation, forcing executives to adopt new processes and systems to achieve better results, but investors tend to support the foreign bidder over the team. national management.
And why, when the UK is no longer part of the EU’s single market and customs union, will foreign companies want to invest other than to sell UK consumers products that could and should be developed and manufactured? by UK companies.
Rather than taking the easy route and simply inviting foreign companies to take over UK plc, luring them in with tax breaks and subsidies, the government should make the effort to support and encourage local businesses.
Not so long ago, Minister of Business Kwasi Kwarteng abolished the Industrial Strategy Board. There is no replacement yet.
It does not make sense for ministers to spend time and effort attracting foreign investment and putting support for UK business on the back burner.
FCA faces tough choices over Amigo’s future
Venture lender Amigo Loans won’t give up. Buried under a host of complaints and growing debt, he was expected to file for bankruptcy. When the financial regulator declared its previous bailout unacceptable and the courts accepted, there was no turning back.
Yet managing director Gary Jennison remains convinced that a new plan to settle tens of thousands of abuse claims is possible even after Amigo reported pre-tax losses of £ 284million over the course of the year. year to March – up from £ 38.8million the year before. year.
Admittedly, the last regime was a failure. He offered only 5-10% of any successful claim, limited the compensation pot to just £ 35million and 15% of all profits over the next four years. While the turnaround saved the business, administrators were in line for seven-figure payments.
It is not clear that the regulator, the Financial Conduct Authority, will block Jennison the next time around. In July, he said a similar bailout by door-to-door lender Provident Financial was unacceptable but would not be challenged in court for fear of the company as a whole going bankrupt.
Maybe he was swayed by Provident saying he would shut down his 141-year-old door-to-door operation and focus on other businesses as Amigo wants to start charging 49.9% of the money again. interest to those who are desperate enough to pay such high fees.
Many activists believe the FCA should just regulate the subprime industry so that it doesn’t exist.
But regulator staff face a difficult task when society abdicates responsibility for those who are going through difficult times, often due to divorce, illness or unemployment. People facing short-term financial difficulties need to have access to funds. Without it, they cannot afford to pay rents or charges on other loans and their lives may fall apart.
Over a million people took loans with Amigo and it wasn’t for fun. The issue of Amigo’s survival concerns its directors and shareholders, but also the company as a whole.