RUTH SUNDERLAND The weak pound encourages attacks on British businesses.
The decline in the value of the pound will have the unintended consequence of encouraging even more aggressive raids on British businesses. Foreign investors are scouring the London Stock Exchange for deals like they're shopping at TK Maxx, with sharp elbows.
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Several prominent tech companies, such as cybersecurity provider Darktrace and IT giant Micro Focus, have been targets this summer. They are certainly not the last. Jacob Rees-Mogg is in charge of preventing the corporate crown jewels from leaving Britain. This year's passage of the National Security and Investment Act gives the new Business Secretary the authority to halt harmful takeovers.
Will he actually put them to use is the question.
Prior to him, Kwasi Kwarteng had taken a more moderate approach. Rees-Mogg, who has only just gotten his well-shod feet under the desk, is far too new to make any definitive judgments about him at this point. However, one of his first moves was to approve the £5.6 billion buyout of Inmarsat by a US competitor. OneWeb, another satellite company in which the government has a stake, is expected to be sold to Eutelsat, a company sponsored by the government of France.
Although satellite technology is a valuable UK resource, these deals are moving through anyway. Rees-Mogg demanded'remedies' from Inmarsat, including the creation of more American research and development employment. However, assurances like this aren't always reliable.
Advent International, a US private equity firm, bought the British defence contractor Cobham with multiple similar empty promises. In less than a year, that didn't stop them from butchering their victims. The government, however, appears to have learned nothing. Ultra Electronics, a manufacturer of submarine-hunting technology, has granted Advent the go-ahead to acquire them for £2.6 billion. At this time, it is considering making a move to acquire GB Group, a fraud prevention technology specialist.
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The government shrugs its shoulders, therefore American investors own a large chunk of the UK's defence industry. This remarkable abdication of independent national capabilities and management comes despite the fact that we are long-standing allies.
Foreign investors have found the UK stock market to be the most welcoming since the Big Bang of the 1980s. This has worked out marvellously in a few situations. European corporations like Akzo-Nobel, which acquired the former ICI paints businesses, and several German and Japanese automakers have been excellent owners.
However, there has been no attempt to separate legitimate, long-term customers from shady ones. Those who invest in the City are often criticised for their alleged inability to appreciate or grasp technological advancements. Furthermore, ministers have a limited perspective on foreign acquisitions.
How about some British Steel? In 2019, it was nearly bankrupt, and its demise threatened the livelihoods of thousands of people. Despite the apparent risks, the government welcomed a Chinese acquisition with open arms. The acquisition of Newport Wafer Fab, a semiconductor company, by Nexperia, which is financed by the Chinese government, is the next significant deal to come over Rees-desk. Mogg's He should see the absurdity in letting China retain control and issue a rescinding of the deal.
Politicians are tempted to wave through major transactions for the publicity because doing so enables them to boast that the UK is more business-friendly as a result of their policies. Kwarteng's desire for growth and the city's Big Bang 2.0 may inspire such a reaction. But true development calls for investment in British technology, innovation, research, and jobs. Having to resort to fire sales to foreign pirates is not the way to success.
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