Two European countries. Country A is the recipient of tens of billions of dollars
in foreign direct investment – $90 billion in 2005, to be precise. Country
B, well, isn’t. Every time someone wants to throw money at the country, the
government finds a way of preventing the deal from happening. Which country
is likely to be in the stronger competitive position? If you lived in Country
A, would you complain about Country B’s behaviour, or would you secretly relish
Of course, this being Europe, everything is topsy-turvey, and in fact Country
A is putting
up an enormous stink about how Country B’s policies are unfair. A, to make
things clear, is the UK; B is France. Or Spain. Or Germany. It’s not entirely
clear. But it’s not just the leftists in the trades unions who are coming out
with protectionist nonsense:
The head of the Confederation of British Industry also expressed concern.
"I don’t want to live in a Britain where we ban overseas companies but
you can’t expect Britain to go on and watch other countries change the rules
when they want to," said Sir Digby Jones.
The problem, insofar as there is a problem, is that it’s easier for French
companies to buy UK companies than it is for UK companies to buy French companies.
Yes, this is the sort of thing which the EU exists to resolve, and yes, the
European commission has already promised to take legal action against France
for its protectionist moves. But really, which country is more harmed here?
I’m not an expert on industry, but I know a little bit about Cemex, which is
the best-run cement company in the world. It recently bought Britain’s RMC.
That’s great news for Britain, because not only did RMC go for $6 billion in
cash, but it’s now got a significantly improved management which will make Britain’s
cement industry increasingly competitive vis-a-vis Lafarge, of France. Meanwhile,
Lafarge, protected from takeover, is losing ground to Cemex-RMC.
Yes, UK companies should be able to expand in Europe through large-scale M&A
transactions. But it’s idiotic to point enviously at France and talk about how
they "support the principle of national champions" over there. I can
tell you that here in the US, Americans love the wonderfully British Mini Cooper.
Do they know it’s made by BMW? Quite possibly. But do they think that makes
it less British? I don’t think so. The nationality of one’s owners really shouldn’t
be relevant these days. Neither in British industry nor in US ports.