The paradox of the take over of the Stock Exchange

One of the oddest features of some experts in the City is they worry about the impact of leaving the EU but say nothing about foreign take over of the Stock Exchange. When it comes to Brexit they take a dim view of how the rest of the EU is likely to react.

As they fear retaliation against UK service trade on Brexit, shouldn’t  they should fear retaliation against us even more if we  allow foreign take  over of one of our crucial service sector assets? I think they exaggerate the ability and willingness of the 27 to damage our service trade, as they need access to London and will see passports are two way affairs.

However, it is true that the EU has been trying to move trading in Euro into the Euro area. Inside the EU we have tried to resist this policy. We did  not get agreement from negotiation. We only won last time because we went to court, and they ruled that the ECB does not currently have the power to do it. That could change whether we are in the EU or not.

The Stock Exchange controls various crucial London markets, from main board shares through Aim smaller company shares to bonds and  derivatives. If we allow overseas  control of a merged  body, what ability do we have to stop the new owners seeking to switch business from London to Frankfurt? How long would any assurances that London will remain the larger market and the HQ last for?

There are good competition grounds to refer the planned merger and consider blocking the bid. The two markets combined will have large shares of EU equity and bond trading. There are issues about access to capital especially for smaller companies.

Mrs May proposed  a new policy to protect important national assests from foreign take over. How does the Stock Exchange fit into  the new policy?

John Redwood

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75 Comments

  1. Mark B
    Posted August 12, 2016 at 6:05 am | Permalink

    Good morning.

    on this occasion, although I can understand and agree with our kind host on patriotic grounds as well as others he describes, I for the life of me fail to see the difference between foreign ownership of the LSE and utilities, rail or anything else we have had to peddle-off in the last 40 years.

    We have sold our industries to private owners, only to see them ship production to overseas. It was OK then because it was only the little people that were affected, now it seems, those in the Stockbroker Belt are to have visited upon them the same competition, merger / takeover rules that they themselves have grown wealthy on. Shame.

    What concerns me more, is not who owns what, but who makes the rules. It is odd that many parliamentarians, our kind host excluded, are happy for foreigners to do their jobs and the jobs of Civil Servants, but seem to have issues when it comes to things like this.

    The EU was all about France and Germany. And France and Germany want what is ours. The EU also sees the UK Financial Services as a great big cash cow that they can plunder. And there is nothing our new PM can do to stop this juggernaut.

    When are 649 MP’s and associated hangers on going to realise that the EU and others are out for their own self interests an not anyone else ?

    Reply I am raising the issue of the SE because Mrs May has said she wishes to stop various overseas takeovers. This looks like a good case in point which is still live. Hinkley is another.

    • Mark B
      Posted August 12, 2016 at 11:06 am | Permalink

      Reply to reply

      She can say all she wants, when it comes to matters EU, she cannot do an damned thing.

      • DaveM
        Posted August 12, 2016 at 12:39 pm | Permalink

        Incidentally: £2.45 billion paid to the EU for membership since we voted to Leave. 7 weeks ago.

    • Lifelogic
      Posted August 12, 2016 at 11:43 am | Permalink

      Hinckley (like hs2) is not a sensible project anyway, there are far better & cheaper nuclear and gas/coal options.

      Frazer Nelson is quite right today in the telegraph tax cuts are what we need. He says, Mr Osborne always declared himself “a fiscal conservative but a monetary activist”. Precisely the wrong way round.

      Then again one would expect Osborne to get things the wrong way round he always has. Why on earth did Cameron offer this dire misguided failure (who threatened the nations voters with higher mortgages and taxes to try to get them to vote remain) the Order of the Companions of Honour?

      James Delingpole has an excellent piece on this “two fingers to the nation from Cameron honours list” and Charles Moore an excellent piece in the Spectator on honours for “remain” journalists. The BBC is still remain to its core.

      Meanwhile rather than setting a sensible direction or doing anything useful Mrs May is just hiking in Switzerland. Only three and a bit years left to get the economy on the right path. Get on with woman, at least say you are going to cut taxes, make energy cheaper and have a bonfire of red tape!

      Just saying it helps confidence or is she another Major/Blair/Brown/Clegg/Cameron Libdim?

      • Richard1
        Posted August 12, 2016 at 1:38 pm | Permalink

        I don’t begrudge Mrs May a holiday and she has chosen very well. I imagine she is biding her time, but let’s indeed hope for something radical and confidence boosting at least at the time of the Autumn statement

        • Lifelogic
          Posted August 12, 2016 at 2:53 pm | Permalink

          No time to lose, the changes need time to take effect, the next election is less than four years away. At the very least she could indicate a direction of travel. The only thing she has done so far is to waffle on about bonkers legislation on board room composition and delay Hinckley.

          She is still pissing money down the drain on endless greencrap grants, HS2 and Hinkley too. No decision on Heathwick, at least indicate the direction of travel. It should be the opposite of the dire Osborne agenda and undoing the vast damage he did with his IHT ratting, pension and landlord mugging, central wage controls, expensive greencrap energy and his endless tax borrow and piss down the drain lunacy.

          We also have 6,000 people blocking beds in the NHS for the sake of suitable alternative care. This costing billions and endless urgently needed operations being cancelled and delayed, often for many years. Is the NHS her “priority in three letters” is she a “low tax conservative at heart” if so she should start charging for it and break it up.

          Still I hope she enjoys her walks in the mountains. Does she still maintain we had control of our borders through Schengen?

      • Lifelogic
        Posted August 12, 2016 at 3:32 pm | Permalink

        So the government is going ahead with the hugely misguided apprentice tax on large companies. All the signs from this new T May government are that it is going to be just as barmy/lefty/interventionist as the bonkers Cameron/Clegg/Osborne agenda was.

        You need to get the government out of the way of business, not tie them in knots with red tape and new taxes at every turn.

    • acorn
      Posted August 12, 2016 at 2:30 pm | Permalink

      The Dutch have just signed up for a 700 MW off-shore wind farm at a 15 year non escalating strike price of €72.7 / MWh (£62 / MWh) with export cables; connections and transmission costs paid for by the Dutch grid operator. Hinkley C at £92.50 MWh with transmission costs is starting to look expensive. Average 24/7/365 wind speed 9.5 m/sec.

      • Lifelogic
        Posted August 12, 2016 at 7:40 pm | Permalink

        Indeed Hinkley is far too expensive, but it is very hard to compare wind with other sources as it is intermittent and not produced on demand. You would need to go into the fine detail of the contracts. The electricity from wind is far less valuable than on demand gas/coal and (to a lesser degree) nuclear.

    • David Lister
      Posted August 12, 2016 at 3:24 pm | Permalink

      But why be selective about LSE?

      ARM could have formed a much greater part of an industrial strategy: a fantastic British company bringing in overseas currency into the UK and forming the basis for a high value industry. Now being transferred into Japanese hands on the cheap following the pound devaluation against the Yen.

      • David Lister
        Posted August 12, 2016 at 3:59 pm | Permalink

        John,

        I hope you are following the farcical statement from Liam Fox this morning regards reverting to WTO status after Brexit. This would be catastrophic to our economy as it has no provision for services and would pretty much scupper our manufacturing base as well for the reasons described in WTO monograph:

        http://www.eureferendum.com/blogview.aspx?blogno=80999

        What the hell is going on in government? I recall you dismissed paid legal advisors but it seems that Liam’s department is in desperate need of some.

        • David Lister
          Posted August 12, 2016 at 4:07 pm | Permalink

          Oh man. It just gets more farcical as the department has withdrawn the statement. There really is no plan at all for a post Brexit trading arrangement. Is there?

          Reply Yes, I have set one

          • Stephen Henry
            Posted August 12, 2016 at 8:40 pm | Permalink

            Reply to reply.Yes you have but unfortunately you appear to have the same eyes and ears of the cabinet as the rest of us have.

          • David Lister
            Posted August 12, 2016 at 8:42 pm | Permalink

            Where exactly is your plan of what we do the day after our 2-year period expires after trigerring Article 50? Are we in WTO, EEA, ETF … what bilateral agreements are needed?

            Is your plan still consistent with the latest legal understanding, and with the feedback from other Heads of State regards the fundamental principles of access to the Single Market?

            Do you still think that immigration control and avoidance of payments and single market access for services (digital and financial) are all achievable?

            Where do we find the latest version of your plan? Is it a blog entry or a publication that has been reviewed and debated.?

            Reply Try reading what i puglish if you are interested. My plan is to offer no change to current arrangements. Nor do I see we need to argue about thia for two years!

      • libertarian
        Posted August 13, 2016 at 9:38 am | Permalink

        David Lister

        Shouldn’t you be back on Red Dwarf?

        ARM
        £24 billion is on the cheap? Really ?

        I guess you dont understand free markets. It wasn’t transferred the shareholders ( the owners of the company) decided to sell their shares . The company was not owned by a country ……. If you want government controlled industrial strategy then you need to nationalise everything , and you know how that always works out…… try googling ICL and its history of failure by government intervention ( oh and ICL is now also Japanese being part of Fujitsu)

        • David Lister
          Posted August 13, 2016 at 3:48 pm | Permalink

          Mr Hauser, founder of ARM “determination of what comes next for technology will not be decided in Britain any more, but in Japan”.

          …. that is not a good start for any national industrial strategy. Thanks for your education in free markets.

          • Edward2
            Posted August 13, 2016 at 4:47 pm | Permalink

            Me Hauser was free to purchase his original company by using his ability to raise funding capital from lending institutions and then offering the shareholders a better deal.
            But he did not choose to do so.

            Would you complain when UK companies buy companies in Japan or other foreign countries?
            Or is that all OK with you?

          • libertarian
            Posted August 13, 2016 at 7:20 pm | Permalink

            David Lister

            My education attempt obviously failed !

            A FREE market doesn’t have an industrial strategy

            Oh an Mr Hauser is somewhat mistaken if he thought all technology futures has been decided in Britain over the last 50 years .

          • libertarian
            Posted August 13, 2016 at 7:23 pm | Permalink

            David Lister

            Herr Hauser by the way is Austrian , so presumably you are happy that an Austrian founded and owned ARM, but not the Japanese…. Interesting…

      • libertarian
        Posted August 13, 2016 at 10:36 pm | Permalink

        David Lister

        Interesting that SAB Miller has rejected so far the offer of $107 billion from AB InBev as and I quote ” the current weakness of the pound has made the deal less attractive” . Just shows you theres no one answer to anything which is why political/government strategies and 5 year plans etc never work

  2. David Cockburn
    Posted August 12, 2016 at 6:22 am | Permalink

    The rise of ‘dark pools’ and other hidden trading platforms means that the LSE is no longer as important as it was, however that doesn’t mean to say that it could not be used to shift business to Frankfurt.
    In the new electronic age we need market reform to ensure against ‘front running’, abuse of high speed trading and excessive use of debt by companies. While a review to the competitions regulator would be a good idea, a more comprehensive review could be used to strengthen the position of London, ensure fair treatment of investors and reduce the dependence of companies on banks for finance.

    • David Lister
      Posted August 12, 2016 at 9:45 pm | Permalink

      Try reading what i puglish if you are interested. My plan is to offer no change to current arrangements. Nor do I see we need to argue about thia for two years!

      John, I am interested otherwise I wouldn’t be reading this blog! But I where is your plan?. Can you please post your link or reference.

      Reply This site has been mainly about how to leave the EU for the last 3 months!
      E.g. JUly 31 Brexit budget
      July 21/24 freedom of movement
      July 17 Getting out of EU
      July 14 Early Brexit
      July 13 Article 50 draft letter
      July 12 Brexit means Brexit
      July 7 Immigration post Brexit
      July 6 Civil service role in Brexit
      July 2 Guide to getting out
      June 29 Smooth Brexit

      etc etc

  3. Jerry
    Posted August 12, 2016 at 6:22 am | Permalink

    Nice to read your concern about the London Stock Exchange John and you are so right, but it is just a pity that you never aired such concerns about the need to protect other important national assets from foreign take overs, mergers or closures, such as our utilities, transport and so much of our industry.

    • Know-dice
      Posted August 12, 2016 at 7:41 am | Permalink

      Agreed Jerry,

      Brexit is a good opportunity to bring some of these industries and the skills that go with them back home…

      Listening to the BBC this morning they had a piece from a shipbuilder who was enjoying increased business helped by the favourable exchange rate (for exporters) and expected to expand his business in the coming two years.

    • APL
      Posted August 12, 2016 at 8:09 am | Permalink

      Jerry: “but it is just a pity that you never aired such concerns about the need to protect other important national assets from foreign take overs, mergers or closures, such as our utilities,”

      This is getting really scary, I find myself in agreement with Jerry more than once a week these days.

      I’d suggest the ability to make steel is another important national asset, that shouldn’t be permitted to be closed down by foreign interests, either.

      Reply Indeed. I did propose that we should not sell our national assets like power generation to nationalised industries in foreign countries for obvious reasons.

      • zorro
        Posted August 12, 2016 at 2:00 pm | Permalink

        What about the golden share option?

        zorro

      • fedupsoutherner
        Posted August 12, 2016 at 3:16 pm | Permalink

        Reply to APL reply. On the subject of power generation John, it is being reported in the Scottish papers that on Sunday wind power was supplying all of Scotland’s electricity because of the high winds we had all day. What they didn’t tell you was that over £3million was paid out in constraint payments to turn off certain wind farms because there was too much. This is a record payment for one day in just Scotland alone. Hardly what you could call a reliable or economical way of generating electricity. What is more absurd is the fact that hundreds more turbines are waiting to be erected.

    • Patrick Geddes
      Posted August 12, 2016 at 9:42 am | Permalink

      You had a bad few days Jerry ?
      You’ve gone all cynical and bitter.

  4. Des
    Posted August 12, 2016 at 6:57 am | Permalink

    That would appear to be a valid analysis.
    Times have changed from coal and steel being “Strategic National Assets” to financial services.
    My personal view is that I’m uncomfortable with the City being so important but it is what it is. To be honest I don’t really understand finances but I can see it is the centre of gravity of our economy AND a global asset with outreach. Rolls Royce cars are one thing but the Stock Exchange is another.

    • oldtimer
      Posted August 12, 2016 at 8:30 am | Permalink

      Rolls Royce, the car brand, is already owned by BMW. Rolls Royce, the maker of jet engines, is still a quoted FTSE 100 plc.

    • REPay
      Posted August 12, 2016 at 1:43 pm | Permalink

      I am not sure the exchange is a strategic asset. It’s main role is to trade UK equities and a few international stocks (GDRs/ADRs) – better managed in the 1990s it could have done a lot more. What I am sure of is that there will be attempts to drive business out of London to the EU/Euro area through legislation. Much other legislation from the EU has had this aim – the “passport” concept (Investment Services Directive) was aimed to allow FIs to trade remotely into the London market (It backfired when FIs centralized in London). EU countries were forced to have their own stock markets – the only aim of which was to break the Irish away from the London Stock Exchange. Il y aura des consequences…as President Hollande threatened. I trust that David Davis is on top of all these issues and selecting what battles to fight.

  5. Ian Wragg
    Posted August 12, 2016 at 7:00 am | Permalink

    Part of the EU master plan to bankrupt Britain.
    Takeover of all strategic assets by the French and German aided by their governments.
    No such reciprocal takeovers would be allowed.
    We now see China (alleged to have taken US secrets ed) but still we have people like the (unpleasant Mr Mandelson – toned down version ed) recommending we go ahead with Hinckley Point.
    The government should step in and stop the stock exchange merger.

    • Qubus
      Posted August 12, 2016 at 12:51 pm | Permalink

      I totally agree about Hinckley Point. It is, in my opinion, a national scandal that the UK allowed nuclear know-how to vanish from the UK, when not that long ago we led the world in that field. I also agree, in general, with other countries should not be allowed to take-over many other large, UK-based concerns e.g. steel, to mention just one. But, in the case of Hinckley Point, haven’t we left it rather too late to stop the lights going out? This should have been considered years ago.

  6. Antisthenes
    Posted August 12, 2016 at 7:29 am | Permalink

    The EU has always been determined to expropriate the UK’s wealth by fair or foul means and as Brussels can do pretty much anything it likes (despite the one success, next time it will be found Brussels have changed the ECJ’s rules) it will succeed if we remain a member in any shape or form. After we leave they will not give up and from what you say this sale of the LSE could be one route which they could use. So indeed the sale should not go ahead until we are certain that it does not leave a door open for the EU to continue their plundering ways.

  7. alan jutson
    Posted August 12, 2016 at 7:37 am | Permalink

    Seems like lunacy to allow such a takeover to me, but what do I know, I am not a shareholder or a politician.

    The history of foreign takeovers of most companies and organisations is not a good one, no matter how many promises they make.

    I would have thought alarm bells would have rung long before now, but given we are allowing foreign companies/powers to run our electricity generating and water industries (the very basic necessities of life) it comes as no surprise.

    Seems we once again know the cost of everything but the value of nothing.

  8. Richard1
    Posted August 12, 2016 at 7:39 am | Permalink

    I hope we are not going to move into a protectionist / mercantilist mentality as advocated by some supposedly free market commentators such as the Daily Mails City Editor Mr Brummer. So what if the combined stock exchange has an ultimate German holding company? Most of the major banks and other institutions operating in the City are now ‘foreign’, but the City is hugely larger and more globally important than 35 years ago when most of the operators were clearly clearly ‘British’. This is a matter for the shareholders of the Stock Exchange. Considerations for the rest of us are: will there still be a liquid capital market for companies? (Yes) is the deal likely to enhance investment in infrastructure and info systems? (yes) are there synergies to be realised meaning resources can be more efficiently deployed? (Yes) etc. Besides, who knows how shares will be traded in 20 years, re might be all sorts of different technological alternatives (blockchain etc). NASDAQ now owns some other major European stock exchanges but that hasn’t diminished the effectiveness of those local capital markets at all, nor the powers of those governments to set regulation as they wish.

  9. Edward.
    Posted August 12, 2016 at 7:44 am | Permalink

    The London Stock Exchange Group seems to be a highly acquisitive company, at no point was I ever convinced by their [LSEG] arguments for a prospective merger with the Deutshe Bourse.

    Now and thank heavens that, we are leaving the Brussels federal project the reasons for a merger if any could be unearthed are fast fading away.

    Let them do as they require in Frankfurt, even as €eurozone-land its self inflicted sclerosis of protectionism, over regulation and petty bureaucracy, the € too high for some but too low for others, with economic inertia, off shoring, stagnation, production imbalances and inefficiencies set at its heart, the German economy is still robust [I wonder why?].

    However, the more autonomy the London Stock Exchange can exercise is, should be, primarily to be outward looking to the world not narrowly more focused on the EU and thus to, concentrating on the overall benefit of UK stock market, trading and investments.

  10. The Prangwizard
    Posted August 12, 2016 at 8:18 am | Permalink

    It is certainly time that policy about ownership and attitudes were changed. Most of us believe I think that the City’s and others keeness to get money at all costs from wherever it could be got has been wrong. The takeover of the Stock Exchange is against our national interest and I believe it must be blocked. It does matter who owns certain assets.

    Reversal of attitudes is urgent but great damage has been done and it will be a long way back.

    Hinkley Point is anther deal which must be called off.

  11. Denis Cooper
    Posted August 12, 2016 at 8:32 am | Permalink

    Would I be correct in thinking that the lack of adequate guaranteed protection for the City was another defect of the Maastricht Treaty which permitted the EU to start issuing its own currency? Of course if we had joined the euro as the government intended then the euro clearing problem would not have arisen, at least not in the same form.

    However even the FT seems to think that the practical difficulties are too great for the ECB policy to succeed; and we know there are some extremely ingenious people in the City, indeed they are sometimes too clever by half for our good if not theirs:

    http://www.ft.com/cms/s/0/e7b6a752-3dec-11e6-8716-a4a71e8140b0.html#axzz4H6SaEBYQ

    “Why the EU’s euro clearing Brexit threat may never happen”

    • Richard1
      Posted August 12, 2016 at 1:41 pm | Permalink

      The government at the time of Maastricht did not intend the UK to join the euro – they made the euro a specific opt-out (thankfully)

      • Denis Cooper
        Posted August 12, 2016 at 3:52 pm | Permalink

        The Major government was forced to get a euro opt-out because there were too many rebel Tory MPs to be ignored.

        At no time did it rule out the UK joining the euro, it was always a case of “wait and see” and “keep our options open”.

        And it agreed that as the EU enlarged the eurozone would also expand, with a time delay, so minoritising the UK .

        • Richard1
          Posted August 12, 2016 at 8:16 pm | Permalink

          Major deserves more credit than he gets for skilfully negotiating the UK out of the euro and the social chapter at Maastricht. Opposition to the euro pre-mid 2000s was much more muted than now. (The eurosceptic William Hague fought the 2001 election on a platform of not joining the euro ‘during the next parliament’ (so joining in eg 2006 could have been ok), supported by the large majority of Conservative MPs.)

          Labour foolishly gave up Majors social chapter opt out (and came close to foisting the euro on us), just like they gave up much of Thatchers Fontainebleau rebate.

          There is a fine record of Conservative PMs getting a good result from European negotiations (albeit often being undone by subsequent Labour governments). Let’s hope Mrs May follows in that successful tradition and that Labour under Corbyn or Corbyn-lite/smarmy is in no position to get elected.

          Reply We had a veto over Maastricht so he should have said No to the whole thing as I advised at the time

          • Richard1
            Posted August 12, 2016 at 9:29 pm | Permalink

            There would have been no support in the country at the time for the Government to have vetoed a treaty wanted by all other EU governments, and block monetary union which they all wanted to implement. Remember, one of the platforms on which Blair won a landslide in 1997 was to put the UK ‘at the heart of Europe’. Major was therefore right to recognise this and exempt the UK from the worst bits of Maastricht. Trying to ‘save’ Europe (before the evidence of the disaster had unfolded) would not have been sensible.

            Reply Blair won because Major had done great damage to the UK economy through being too pro EU and adopting the ERM

        • Denis Cooper
          Posted August 13, 2016 at 7:22 am | Permalink

          Major deserves no credit at all, he had a veto and he should have used it to block the whole euro lunacy.

  12. The Active Citizen
    Posted August 12, 2016 at 8:37 am | Permalink

    My vote has always been to block this one, along with what I consider to be other strategic assets such as energy provision – Hinckley Point being a case in point.

    Hinckley is not all about the Chinese in my view – there are other major considerations, not the least of which being putting the build in the hands of a failing French virtually-nationalised utility which hasn’t yet managed to succeed in anything comparable.

    I’m not against inward investment, except in certain cases where I can see the national interests being potentially at risk in the future. Call me old-fashioned but I’d rather see the Stock Exchange in British hands.

  13. agricola
    Posted August 12, 2016 at 8:54 am | Permalink

    For those within the Stock Exchange, and in particular those who own a slice of it, there is the motive of personal gain. I do not think you need to look further when trying to explain their reactions.

    In the strategic interests of the UK there should be no foreign takeover. Foreign participation by all means, but ultimate control should rest with the UK. Additionally it should be made clear that the Stock Exchange and how it operates is not a bargaining chip in the process to Brexit.

    The EU is in a state of chaotic conflict within itself with twenty seven opinions on just about everything. It means it will be impossible to accommodate them all if we aim at a clear break. We should offer them , Tariff Free Trade. Unfetterred existence where they are for citizens of the EU in the UK and the reciprocal. Cooperation where it is of mutual benefit. Reversion to international maritime borders. We should inform them that immigration from the EU to the UK will be for pre-arranged work, or retirement. There will be no open door. Finally they should be told that our wish is to remain friendly but independant. Make it clear that if they do not like this they are free to do as they think fit.

    My final message is get on with it via the invoking of Article 50, They then have two years to make up their minds.

    • Andy
      Posted August 12, 2016 at 9:28 pm | Permalink

      I would give them 2 years. I would present that ‘letter’ with those terms set out and on the same day introuduce a Bill to repeal the 1972 Act !

  14. Bert Young
    Posted August 12, 2016 at 9:12 am | Permalink

    Control of the Stock Exchange is vital to the activities of the City . If the German take-over is allowed to go-ahead there will be other moves difficult to stop . “Brexit” ought to mean Brexit – the substance of which is control over our affairs . Frankfurt has waved a flag of welcome to City operators in its desperate attempts to make it the financial centre of importance ; it has been restricted in the past but , from now on it will consider itself a free bird .

    A nail in the coffin occured when a non Brit became its boss ; of course he was able to initiate interest and the subsequent follow up of the take-over . The fudging around the edges that subsequently followed of %age control limitation is nothing but a cover up and fig leaf offering to outside observers . Osborne and his lack of worldliness was wide open to this move , so , with him now out of the way it is imperative that we put a stop in place .

    The Stock Exchange is a major international attraction to investors and dealers ; any attempt to neutralise this must not be allowed . I want Theresa to now show her teeth and determination to keep and exploit the assets that we have and not allow them to be wittered away .

  15. Beverley Dunlop
    Posted August 12, 2016 at 9:15 am | Permalink

    There is no European Union country able to challenge the U.K.’s dominant position in financial services. Canary Wharf alone is bigger than Frankfurt; we are the biggest exporter of financial services in the world. The Global Financial centres index of March 2016 placed London at the top ahead of New York. No other EU country “strangled by EU regulations” is even in the top 10.

  16. CHRISTOPHER HOUSTON
    Posted August 12, 2016 at 9:34 am | Permalink

    Do people in the City have faith in what the City reputedly says? Surely banknotes fluttering before their very eyes must cause them to think again? Why would the EU Germans proceed taking ownership of our non-EU Stock Exchange?

    Often, throughout our history, it has been a pragmatic and forward-thinking Germany, which slips an ace up its sleeve whilst our business people’s minds are drunk from lunch to teatime.

    US companies have been taking interests and positions in our British companies so as to piggy-back on them into the EU and beyond to India and China…areas too like the Middle East where American entrepreneurship is not always invited or liked. Similarly, there will be German and other EU-nation companies who will now seek to piggy-back on us as a non-EU nation into realms the EU High Command in Berlin, Paris and Brussels frown upon.

    In point of fact, from a foreign perspective, few countries and foreign companies reckon The City is much cop. Remember the old quote attributed to Napoleon “England is a nation of shopkeepers” ? The last time I looked, many shops, cafes, restaurants, takeaways are foreign owned, staffed by foreigners and selling foreign food.

    One remembers as a child being sent by ones mother in the midst of cooking a lunch, for some forgotten salt…only to find a little curtain drawn across the glass of the shop door with the much hated sign saying.” Closed for dinner…” open again in one and a half hours.

    Taking over UK businesses at every level by foreigners is easy. All they need to do is function as a legitimate business and UK competition disintegrates and displaces into clever statements by The City.

  17. forthurst
    Posted August 12, 2016 at 10:00 am | Permalink

    Not a peep about ARM Holdings; the idea that we can be an economically successful country when most of our industry is foreign owned including much of the City as a result of parnerships selling out to foreign banks in the aftermath of the ‘Big Bang’ is patently false hence the large discrepancy between the size of our economy and the purchasing power of the people who find themselves paying rent to foreigners for almost everything they need.

    One obvious consequence of foreign ownership in the City was that when the Wall Street banksters packaged up (low grade ed) mortgages as ‘investment grade’ CDOs in a loose money free-for-all engineered by the private secret FED, the City caught the contagion with grievous consequences for our economy and for the taxpayers who were forced to make good the loses of massive (questionable ed) activity for which none of the perpetrators were banged to rights.

    Foreign ownership means total loss of control irrespective of any ‘assurances’ given to the government or workforce, which has been proven time and again, and allowing greedy shareholders, many of whom may foreign, anyhow, the last say is not in the interests of the country when their only interest is in short term capital gain. Many countries do not allow their major national assets to be flogged off to the highest bidder and these countries are growing wealthier and are more autonomous whilst we are not.

    Is Mrs May waiting till everything has already been auctioned off before implementing her hardline policy on the sale of nationally important assets? When will she understand that ‘assurances’ are not worth the paper they are written on and that assets, once foreign owned can be sold on at a later date and frequently are, over which we have no control either?

  18. graham1946
    Posted August 12, 2016 at 10:04 am | Permalink

    The difference between Brexit and the sale of the LSE is that with Brexit there was no quick buck for the City boys in Brexit. They would sell their grannnies for a few quick quid. The national interest or pride doesn’t come into it. Everything these days is short term, everything is for sale and hang the consequences. It’s one reason the Remainers are so determined to reverse the referendum – they simply cannot conceive of a long term gain and want to cling to nurse so they don’t have to face any perceived risk or hard work.

  19. Gte
    Posted August 12, 2016 at 10:10 am | Permalink

    It’s irrelevant. The settlement function is going to go the way of the dinosaurs. It’s business model is about to evaporate.

    The regulators want to get rid of settlement risk. The move from T+1 settlement to instantaneous settlement is happening.

    To get instantaneous settlement, you can go blockchain. That means there is no role at all for a stock exchange for settlement at all.

    They disappear completely, just as mini cab firms have been wiped out by Uber.

    • forthurst
      Posted August 12, 2016 at 12:16 pm | Permalink

      “To get instantaneous settlement, you can go blockchain.”

      Gilts have always been by cash settlement with the stock transfer process trailing behind. Don’t forget about stock and links to company registers; I think you envision rather a large database to put it mildly.

  20. acorn
    Posted August 12, 2016 at 10:16 am | Permalink

    Mrs Theresa May, […] has just taken a logical yet, in the context of her country, quasi revolutionary step. Presiding the first meeting of the inter-ministerial commission on “economic and industrial strategy”.

    She committed herself to setting a-foot a true industrial policy. In a Great Britain that has been ravaged by more than 35 years of “neo-liberalism,” this is tantamount to a small revolution. The fact that it was launched by a Conservative Prime Minister, of the very party of Margaret Thatcher, stresses its revolutionary character even more.

    If the measures themselves are remaining blurry for the time being, it remains that it is the first time that a head of a British government is stating her interest for the secondary sector, since Margaret Thatcher has buried the very concept of an industrial policy more than thirty years ago.

    It announces a change in paradigm. The latest studies by organizations such as the IMF are depicting and appraising globalization in a far more negative manner than was the case fifteen years ago. We are beginning to understand today that the concept of globalization, such as it was advocated by the IMF (ten years ago) or the OECD, is not the solution. (Paraphrased from “Theresa May and the paradigm change” – google RussEurope).

    If Mrs May can attract the non-Marxist left out of the Labour Party; and, dump the Thatcherite Right out of the Conservative Party, she could command the centre ground of UK politics for a decade, if not more.

    Conservative governments are never “hands on” the economy. By nature, they leave everything to “markets” which end up being monopolised by the 1%. If Mrs May can pull this off, WTF, even I would vote for her!

    Reply I support her wish to have a better industrial strategy. Conservatives have never relied entirely on markets, and fully understand the state plays a big role as it spends 40% of our total GDP

    • forthurst
      Posted August 12, 2016 at 12:10 pm | Permalink

      “Conservatives have never relied entirely on markets”

      CMD’s Business department were keen to dispose of their Rolls-Royce ‘golden’ share so that CMD’s City chums could enjoy yet another feeding frenzy at the nation’s expense; unfortunately for them, the new CEO started to turn the company round in the nick of time, pulling the rug from under their greedy, parasitical feet.

    • acorn
      Posted August 12, 2016 at 12:58 pm | Permalink

      To complete this paradigm shift, we need to convert Mr Hammond to Modern Monetary Theory MMT. Or at least teach him the basics of how to use fiat currency based fiscal policies, to maximise the use of labour and capital resources, in each sector of our economy, up to the point of inflation.

      I am starting to get enthusiastic about this, please don’t let me down Mrs May.

    • Richard1
      Posted August 12, 2016 at 1:46 pm | Permalink

      An ‘industrial strategy’ which does things like promote innovation and competition and implements low and simplified taxes is to be welcomed. A Heseltine-type industrial strategy in which ministers and big Corporates sit round a table and say ‘the UK needs a big [fill in blank] industry so let’s subsidise and protect to bring it about’ appears over many decades of experience in the UK and elsewhere to be a very bad idea. Let’s hope Mrs May wants the first kind of industrial strategy not the second.

    • Lifelogic
      Posted August 12, 2016 at 4:43 pm | Permalink

      As you say clearly Conservatives have never relied entirely on markets, and fully understand the state plays a big role as it spends 40% of our total GDP. We do of course need some law and order and limits on markets. One cannot legally buy murders or threaten people for money for example.

      “Spends” well indeed it does, but what real value does the public get from this vast spend? Much of it is wasted and much of it just inconveniences the productive (which is even worse). Much of it is used to actually discourage people from working, counterproductive wars, endless red tape, pointless wind turbines, HS2…..

      • Richard1
        Posted August 12, 2016 at 8:20 pm | Permalink

        Switzerland does v well with the state at c 30% of GDP (and no deficit) and Singapore and Hong Kong with c 20%.

        • acorn
          Posted August 13, 2016 at 7:20 am | Permalink

          That’s what happens when you consistently run large BoP surpluses; Singapore 19%.

  21. Hope
    Posted August 12, 2016 at 10:39 am | Permalink

    It fits her plan to remain in the EU! after all the lies and spin by Cameron to stay in the EU, I would have thought you learnt from experience. May claimed we have control of our borders!

  22. Ed Mahony
    Posted August 12, 2016 at 12:18 pm | Permalink

    Sorry (won’t comment on the EU again but this is another issue), but just have to say, crucial as our financial services industry is to this country is, why aren’t we focusing more on making stuff – in particular, high-tech manufacturing? The government has an important role to play in helping to sow the seeds and making life easier for the high-tech industry to do well in this country. And where we have British-owned high-tech companies, going global, and inspiring others in this country to do the same.
    It’s sad that ARM has been taken over now by a Japanese company. ARM could have become a truly big, global British high-tech brand. This would have been great for the British high-tech industry in general. Instead, we’ve allowed the Japanese the opportunity of taking ARM to the next stage (with all the medium to long term benefits of this to the Japanese economy).

    • Ed Mahony
      Posted August 12, 2016 at 12:24 pm | Permalink

      (but regarding the EU and ARM, economic historians may well argue in the future that Brexit helped the Japanese buy ARM. Mainly 1. because the drop in the pound made the deal more attractive to the Japanese. But also, to a degree, 2. Mrs May has so much on her plate at the moment with Brexit that she/government simply didn’t have the time/energy to deal things with things such as ARM).

  23. CHRISTOPHER HOUSTON
    Posted August 12, 2016 at 12:41 pm | Permalink

    Off Topic:
    Shami Chakrabarti, Mr Corbyn’s nominee for a Peerage, neither of whom believe in the House of Lords nor lordly and peery titles, said one thing right.-

    On a BBC Question Time set-to with a mainstream political party MP she declared “There is no such thing as a muslim “Community” in Britain.” The MP limply retorted that it was the practice of MPs to uphold the notion of their being “communities” .

    We are in fact inundated with odd fictions. Ten people make a sign saying “Stop so-and-so” out of a cardboard box and a metre-long stick, march two hundred yards in a village containing 16,000 people or more and we read headlines: “The COMMUNITY of so-and-so village protest and battle against whatever it is.

    In this connection, as much as the Archbishop of Canterbury advocates bombing Syria and Remaining in the EU, he does not appear to be representing ,here on Earth, the views of the Anglican COMMUNITY.., most probably because the Anglican COMMUNITY also does not exist. We are British, we don’t do communities.

  24. Aleksandr Orlov
    Posted August 12, 2016 at 1:12 pm | Permalink

    Not really on topic but why do we reward failure so magnificently in this country?

    You would think that gongs and honours were linked to some form of success. The recent remainiac honours list was a disgrace though it isn’t the only one.

    Seems the MoD’s Director of Warship Acquisition received a gong last month for 9 years in charge.

    The only warship procurement that has occurred in this time to the best of my knowledge would be..

    The carriers, which are 6 years late and massively over budget.

    The Type 45 Air Defence Destroyers, which were late, massively over budget and don’t work in the ‘wrong type of sea’.

    The Type 26 which is indefinitely delayed despite the design work starting in 1998 ( it is currently 60% complete!) , oh and massively over budget.

    Some foreign built supply vessels which are late and a handful of offshore patrol vessels, which appear to be on time!

    The latter OPVs however don’t appear to be quite the triumph you might think. The Irish navy recently built a handful of similar ones in British yards for about £50 million apiece. The contract to build three for the Royal Navy was £360 million.

    • alan jutson
      Posted August 12, 2016 at 3:24 pm | Permalink

      Aleksander

      Agree absolutely with your comments.

      Makes you wonder what they would receive if they were successful !

      • Aleksandr Orlov
        Posted August 13, 2016 at 3:35 am | Permalink

        I suspect I’m due at least an MBE for putting my bins out on time.

        I looked into it a bit further and it is actually worse than I thought. The Mod was given £6 billion to buy 12 air defence destroyers. They spent all the money on six! Hence a billion pounds each, and will probably cost several hundred million more as they are all tied up in port waiting to have their faulty engines changed.

        Also our current ships were designed to last 10 years, the last Type 23 will go out of service in 2035 after 40 years of service…

        This doesn’t strike me as a well managed fleet, quite the opposite!

  25. Dr James Thompson
    Posted August 12, 2016 at 1:56 pm | Permalink

    I agree this should not go ahead until free trading in all Euro securities is agreed.

  26. a-tracy
    Posted August 12, 2016 at 2:16 pm | Permalink

    Perhaps we the citizens of the United Kingdom should be asked if we want to invest in our next new power station in our area instead of relying on Chinese money. This is a more secure return powering our nation ahead in the future. If the nuclear power plant location is not in the right area why was it allowed to go so far don’t we have any parliamentarians or anyone in the House of Lords looking out for our interests?

  27. alan jutson
    Posted August 12, 2016 at 3:27 pm | Permalink

    John, simple question

    If we (the Government) can now borrow money so cheaply, why do we need outsiders to fund such things as Hinckley point at enormous long term cost and risk.

    Reply Of course we could fubd it ourselves in private or public sectors

  28. Margaret
    Posted August 12, 2016 at 5:26 pm | Permalink

    I simply don’t see why we can’t our nerve. If we have the people to manage our money in the UK, if they get large bonuses and salaries to get good killings and pursue investment ,they need nerve.

    Of course we are all going to pathetically bow down to the controllers abroad and say yes you call all the shots and we will all meekly agree and become another Greece.

    P.S off topic. Can anyone recommend a good read. I recently started a novel by Sebastian Faulks ‘ Where my heart used to beat’ The title was enticing and gripping for the first few chapters , then disappointingly it centred around boring war manoeuvres.

  29. miami.mode
    Posted August 12, 2016 at 7:26 pm | Permalink

    Saw an interesting article recently (cannot remember where) that indicated that almost imperceptibly there is a trend in world trade towards protectionism and one of the only ways to overcome this is to buy companies overseas.

  30. norman
    Posted August 12, 2016 at 10:51 pm | Permalink

    Re the issues in your post – parallels with Deuteronomy 28 are disturbing.

  31. JamesG
    Posted August 15, 2016 at 2:49 pm | Permalink

    It’s the national grid that worries me. Why on Earth such a lifeline was privatised is beyond comprehension.

  • About John Redwood


    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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