PS on foreign takeovers

All the time we continue to run a large balance of payments deficit, because our economy is so unbalanced and the private sector so squeezed, we have to continue selling the family silver. More companies will be sold abroad, to raise the money to pay for the imports.

Promoted by Christine Hill on behalf of John Redwood, both of 30 Rose Street Wokingham RG40 1XU

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15 Comments

  1. Demetrius
    Posted April 10, 2010 at 3:47 pm | Permalink

    Lost, lost, lost as the minstrel cried there is now little left to sell and it is not the silver that is going it is the bedding and the chamber pots. See "UK For Sale…." a couple of days ago.

  2. Ian B
    Posted April 10, 2010 at 4:16 pm | Permalink

    Adam Smith would tell you that that's a mercantilist fallacy 😉

    Look at it this way. Suppose; I live in Northampton, which is in England, which I do, and the company I work for (that is, to whom I sell my labour) happens to be owned by a man in Cardiff. Anything wrong with that? No.

    Suppose then Wales is given independence. Now my company owner is a foreigner. What economic difference has it made? None. The same trade is still going on in Northampton and in Cardiff. All that has changed is an imaginary line on a map.

    Well, one thing has changed, which is that the Welsh government now get to tax my boss, instead of the English government. But that makes no difference to me. In fact, I'm glad the English state has a little less money to fritter away on follies. The actual economic situation hasn't changed in any way.

    Suppose the company owner were in France. Is he a foreigner, because he is not in England, or is he a co-national because we are all now citizens of a country called The EU? It's just an arbitrary matter of statistics like GDP (the approach spawned by the mercantilist Keynes). It has no effect on trade and production. The "balance of payments" is meaningless.

    • Tony E
      Posted April 10, 2010 at 11:10 pm | Permalink

      The balance of payments is entirely relevant because it affects the balance of the total amount of sterling held here and abroad. This in turn affects the amount of real money in circulation and the money supply. While we have our own currency, the balance of payments is one of the factors controlling its value.

      Have you filled your car up recently? The cost, I would respectfully suggest, is partly caused by the balance of payments issue.

    • waramess
      Posted April 11, 2010 at 11:10 am | Permalink

      What a faultless post. Pity the politicians can't see things so clearly.

    • DBC Reed
      Posted April 13, 2010 at 10:46 am | Permalink

      Living in Northampton you may be aware that (former -ed)Conservative MP Brian Binley (N'pton South)has gone critical over the Cadbury takeover,is attending protest meetings and asking friendly questions to lefties (current Private Eye) and has told Sir David Hare that he is losing faith in international capitalism (Guardian 9.iv.10).
      It would be good if other ( former-ed) Conservative MP's supported him.

  3. Pat
    Posted April 10, 2010 at 4:53 pm | Permalink

    It seems to me that if we are concerned about foreigners owning companies in the UK, we need to ask why there are so few Britons that can afford to buy companies. I can't help wondering whether the policy of taxing the rich, proposed by the socialists and frequently acquiesced to by the Tories might explain why there are insufficient rich Britons to buy British companies.

  4. Mike Stallard
    Posted April 10, 2010 at 6:43 pm | Permalink

    Does this matter that much?
    The reduction of the swollen public sector, of course, matters more than anything else. Until that is coped with, as it has been in both Ireland and Canada, we are dished.

  5. Stuart Fairney
    Posted April 10, 2010 at 8:07 pm | Permalink

    And if the company is FTSE quoted then the price would be in sterling and so the companies might start to look cheap thanks to the economic genius we have recently witnessed

  6. Bazman
    Posted April 10, 2010 at 9:49 pm | Permalink

    It always takes an election to make an MP think bigger. Don't you agree John?

  7. Steve Wokingham
    Posted April 10, 2010 at 11:36 pm | Permalink

    Basic economics. The Pound depreciates 30% and foreign money buys our stuff (houses in London and stocks).

    We're not selling the family silver. People are buying it.

    John you should know the difference.

  8. Colin Hart
    Posted April 11, 2010 at 11:58 am | Permalink

    Shades of Harold Mac and you know he was just an old mischief maker.

  9. Antisthenes
    Posted April 11, 2010 at 8:45 pm | Permalink

    Who owns a company is not important except he who pays the piper chooses the tune. It is ironic that at one time Britain owned a large chunk of the world now the world owns a large chunk of Britain how fortunes have changed and the tune may not be to our liking.

  10. waramess
    Posted April 12, 2010 at 12:21 pm | Permalink

    Your analysis, I would suggest, is fundamentally flawed.

    Over the past fifty years we have had an economy that has been over taxed and over regulated, such that the number of successful new companies have been inadequate to replace the aging cash cows.

    We should welcome companies like Kraft that come here and buy our mature companies because it is good for our currency reserves and it is good for our investors and because we should have any number of growing companies ready to fill the breach.

    Instead we consider these cash cows as the family silver and want to hang on to them notwithstanding the fact that the owners want to cash in.

    We have been far too busy feeding the state to consider the plight of our economy and even when we got the chance to rebalance it during the bonanza of the mid '80's we failed to grasp the nettle.

    Now we will fail to grasp the nettle citing political expediency and the need to pay down the extraordinary indebtedness endowed upon us by the socialist government.

    We no longer have North Sea gas and oil in sufficient quantities to meet our needs and if the declining production is not replaced by some other equally profitable part of the economy we will now commence an economic decline that will not be arrested.

    What we need is small government and low taxes, but who is there to deliver such a panacea?

  11. cheap ghd
    Posted May 7, 2010 at 9:56 am | Permalink

    It is ironic that at one time Britain owned a large chunk of the world now the world owns a large chunk of Britain how fortunes have changed and the tune may not be to our liking.

  12. Dofus Kamas
    Posted May 13, 2010 at 12:21 pm | Permalink

    my God, i thought you were going to chip in with some decisive insght at the end there, not leave it with leave it to you to decide?

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    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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