ALEX BRUMMER: There will never be a sustainable deep tech sector in Britain if we sell out UK born and paid companies so easily
Lots of gnashing of teeth over the real and perceived exits from the London stock markets. SoftBank’s decision to opt for New York for the Arm Holdings float is causing angst.
I have long held the view that foreign ownership and listings of New York stocks lead to the slow erosion of commitment to the domestic market and the national interest.
It’s one of the reasons why Schneider’s undisputed £10 billion takeover of another Cambridge-based deep tech company, Aveva, was so disappointing.
National interest: Overseas takeovers of UK companies are often harmful, particularly in high tech and life sciences
There will never be a sustainable deep tech sector in Britain if we sell out UK born and paid companies so easily.
The tendency is to forget that the great science and technology at stake is a product of our research universities, much of which is funded by British taxpayers.
The Institute of Trustees may be indulging in fantasy when it calls on Britain to have a Biden-style cut inflation bill with grants for climate change investments. A response to a form of US protectionism is appropriate.
American manufacturing has been stripped bare by the rise of China and East Asia over the past two decades. And there is no way the world’s largest and most sophisticated economy can claim “infant” industry status.
The erosion of British ownership continues with North Sea oil services and engineering company Wood Group under siege by private equity giant Apollo.
Yet Russia’s war on Ukraine has demonstrated that it is not safe for the West to give up fossil fuels just yet. Wood may, for example, have a role to play if and when carbon capture becomes a viable technology.
It is worth remembering that the movement of stock listings, from public to private and overseas takeovers of UK companies, is not a one-way street.
Data from the Office for National Statistics for the last quarter of 2022 shows UK plc’s ambition has not been entirely dashed, with UK businesses taking in £10.2billion in overseas takeovers – up from to the prior period and the last quarter of 2021.
Overseas takeovers of UK companies are often damaging, particularly in high tech and life sciences.
But there is no escaping the fact that the UK has a large current account deficit and needs foreign funds to balance its books.
Foreign investment for mergers and acquisitions fell to £5.3bn in the final months of last year. That’s £15.9 billion less than in the third quarter and £11 billion less than in the same months of 2021.
This equates to a large post-Liz Truss sell order. It’s a stark reminder of Britain’s dependence on the kindness of strangers.
Halifax Tango
The debate over the outlook for UK house prices is raging. This is far from academic, as much of British consumption revolves around our homes.
The Nationwide and Halifax index readings are very different, catering to different segments of the market.
So the switch between falling prices recorded by the Nationwide and rising recorded by the Halifax can be confusing.
It’s hard to ignore the 1.1% rise recorded by the Halifax price index in February.
The annual price increase of 2.1% may be well below inflation, but that doesn’t matter much given that the surge, in the era of ultra-low interest rates, has outpaced inflation.
The reality is that the long-awaited pressure on real incomes has been eased by guaranteed energy prices, lower fuel prices, reasonably generous wage settlements and one-off inflation bonuses.
Employment remains robust. Attracting some of the half-million older workers who have dropped out of the labor market appears to be a Whitehall priority.
The main obstacle to returning to healthier housing is rising interest rates. There is already a pullback from high fixed rates in the fall and recent noise from the Bank of England has been dovish.
Betting on a real estate crash and bargain prices is not a good option.
Minefield
Is the next domino in the crypto universe about to fall?
Silvergate Capital, once a small US regional mortgage broker, is facing insolvency. It had become America’s go-to bank for cryptocurrency businesses looking to convert freshly mined bitcoins and the like into old-school dollars.
Without a loophole, there could be a cascade of further failures.
The bubble has really burst.
