City & Business: Major's barmy army goes way over the top
Sunday 26 May 1996
One might as well be a green, boggled-eyed visitor from Mars in trying to make sense of Her Majesty's Government. Just take the antics of the inmates in this month of May, unfolding weekly like episodes of Marty Feldman meets Absolutely Fabulous.
Week One: a trouncing in the local council elections became "a victory", "a turning point in Conservative fortunes". It was fewer seats lost (just) than last year, you see - no matter that the Tories were defending just a fraction of the number this time.
That was just a prelude to the zany rewriting of history we saw the following week: "Yes it hurt. Yes it worked." Oh really? That's what all the pain's been about? Some tough but much-needed medicine, doses carefully injected, to allow us the sweet joys of recovery.
Negative equity? Boom and bust? Broken tax promises? It was not their fault at all. Nothing to do with raiding the pre-election coffers, nor sterling's crash and the ERM debacle that (accidentally) gave us this export-led, but no feelgood factor recovery. Naturally, it was all planned, right down to the last lost billion.
This week, they went over the top again, tin helmets, strait-jackets, Blazing Saddles and all. The British Eurosceptic Expeditionary Force (BEEF), as my colleague John Lichfield on our daily sister paper so deliciously termed it, wrapped itself in the flag and bravely withdrew to a bunker in Downing Street.
Michael Heseltine might well reflect on the irony. While England and British business were scoring goals on and off field in Peking, his Great Leader back home was packing up his ball in a tantrum and refusing to play.
Much has been written and said of the huge markets for British business in the booming tiger economies of the Far East, of the massive untapped potential of China. Sadly for little Englanders (and Mr Heseltine is not one of them), we cannot up sticks and paddle our little island canoe half way round the world.
The fact is that most of our trade is done with the European Union - 57 per cent of our exports against just 3 per cent to the Far East, including Japan and China, according to the latest figures in the 1996 Annual Abstract of Statistics. Of the total, pounds 17.6bn went to Germany, our most important trading partner (ahead of the US) and staunchest critic over the beef affair.
The sadder fact is that this Government's mishandling of BSE has become Europe's beef crisis, too, perhaps on a greater scale. Beef sales in health- conscious Germany have fallen 45 per cent and in France, Spain and Italy, far more choosy about their food than we, by 25 to 60 per cent. Yet are we suddenly to believe that the crisis of confidence is all their fault and, like UK home owners' Bye-bye Sweet Equity worries, nothing to do with John Major at all?
Of course not. Nor mischievous claims that opposition to a relaxation of the ban on cattle products is merely a Machiavellian ruse to keep up the drooping Dutch sperm industry.
Who has really lost the plot in all this? Last week, Sir Bryan Nicholson, the outgoing president of the Confederation of British Industry, got it exactly right. "This spring has brought forth a flock of cuckoos," he said of the "churlish xenophobia" of the Eurosceptics who are embarrassing British businessmen turning a crust with our European partners.
The Prime Minister shared Sir Bryan's platform, but he clearly had his ears peeled for the last Union Jack squeaking in frenzy from the election cupboard.
The jury is still out on whether this latest Madness of King John will do British business and jobs lasting harm. Certainly, non-cooperation in the short term might block some European measures Britain and its industry actually want.
Above all, though, the jingoism, lack of BSE strategy and even one iota of beef humility is a bad advertisement for Britain. And not only in Europe. The billions of Far Eastern investment, from Japan, Korea and Taiwan, that has flooded here has come to a Britain that is part of a European Union not a blustering bulwark against it. If that disappears, and European consumers turn further against us, Mr Heseltine will have to sell an awful lot of (German-owned) Range Rovers to the Chinese to make it up.
In all the European kerfuffle, it may have hardly been noticed that retail sales actually showed the biggest first-quarter rise for three years. Trusty Marks & Spencer led the retail sector up, with a record profit just short of pounds 1bn.
How untimely then that Liberty, the Regent Street store famed for its patterned prints and paisley scarves, should choose this week to shut all of its 20 provincial branches.
That might perhaps be taken as a warning to other investors, in recently floated Harvey Nichols, for example. Replication of well-known London brands, feeding on a well-heeled West End and tourist clientele, is not that easy on fiercely competitive high streets up and down the land.
So, as we report in our cover story, the countdown starts to the sale of the family plutonium. Perversely, as with Railtrack, the inevitably critical press will only ensure more success for those investors who take the plunge.
The upside for British Energy - and there is a great deal, as chief executive Bob Hawley explained to me on Friday - will be ignored to ensure the issue gets away at a healthy premium.
BZW's latest thoughts give a key insight. Its "reasonable basis" valuation of pounds 1.7bn-pounds 2.1bn goes largely by the board after taking into account fears it believes unjustified.
On Tuesday, ABN Amro Hoare Govett, British Energy's own broker, produces a report with an even more pessimistic view. Part of City horse-trading, no doubt, but rather at odds with Dr Hawley's rosier view?
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