City & Business: We're learning to be confident again

We know the economy has bottomed out and is on course to grow a modest but not unhealthy 1-2 per cent this year. We know where we stand in relation to Europe: the Government says we're not going in for the forseeable future. Referring to the five tests he set for joining the single currency in November 1997, the Chancellor declared on Thursday: "It is clear that at this stage convergence and the tests aren't being met."

What we don't know is the most important thing: how our companies and corporate sector overall are performing in global markets. Measures of national competitiveness remain crude and variable. Stockbrokers compare the performance of UK companies against that of rivals, but only for stock-picking purposes. There is nothing broader - virtually no journalism, say, comparing BP against Exxon or BT against MCI WorldCom.

So we fall back on feelings. It feels as if the corporate community is enjoying a renaissance. Looking back at the quarter century between 1980 and 2005, it feels as if historians will say Britain was blessed with two world-class heads of state and make the link between strong governance and the end to the nation's industrial decline.

Month to month, however, we remain at sea. One day we feel great. The next we plunge into gloom believing nothing has changed from the awful 1970s. Currently, we seem on an upswing - gaining confidence in our performance in global markets.

Item: Craig Barrett, the chief executive of Intel, the Silicon Valley microprocessor maker, said last week that the UK was well positioned to become the European hub for the exploding internet.

Item: BMW announced last week that it was investing pounds 3.3bn over five years in a do-or-die venture to turn Rover around. The Government and Birmingham committed themselves to kicking in pounds 152m. The UK car industry is not dead. Who knows? Maybe Rover's new R75 luxury sedan will prove a hit. Maybe the new 200 and 400 series models that the company will build at Longbridge will prove hits, too.

Item: Last week media company Pearson and merchant bank Lazard announced they were unwinding their 80-year-old relationship. Lazard will sell its stake in Pearson, owners of the FT and Penguin, to the Spanish telecommunications group Telefonica. The Paris and New York arms of the merchant bank will buy out Pearson's 50 per cent stake in Lazard Brothers here.

The Americans would call it a win-win situation. In Telefonica Pearson gains a strategic investor well placed to help it compete in the multimedia world. Forget the rumours about a merger between BSkyB and Canal Plus. Consider the potential for joint venture broadcasting by Pearson and Telefonica via cable and internet.

Freed of conflicting loyalties, the UK arm of Lazard will be better placed to assert its rights. Lazard Brothers chief David Verey could even emerge as the boss of the newly unified bank.

The bank could even emerge as a British institution in spirit - helping Swiss-owned Warburg Dillon Read counterbalance US fire power in the City.

Item: The BBC last week appointed Greg Dyke its new director-general. UK culture is potentially a spectacular export product. The Beeb is the logical candidate to spearhead this business. Under Dyke it may finally carve out a profitable commercial niche by competing against Disney, Turner, and Murdoch abroad, while remaining a public service broadcaster at home. Dyke could even announce a corporate strategy to maximise content and minimise the licence fee by generating profits abroad.

Item: Last week Lloyds TSB agreed to buy life insurance and pension fund provider Scottish Widows for pounds 7bn. It thus secured its place as a resilient financial institution capable of withstanding any challenge from foreign banks eyeing the UK market. We now have two world-class banks - Lloyds and HSBC - capable of standing up to Citigroup, Bank of America, Deutsche, and Swiss Bank Corp.

Speaking to reporters after Lloyds announced its deal with Scottish Widows, chief executive Peter Ellwood offered us all a timely reminder of the name of the game in global markets: set the bar higher day by day, year by year. Aim for continuous improvement in quality and productivity.

It remains a mystery where the globalisation of markets is taking us. Its admirers say to a brave new Nirvana. Critics say to hell in a handbasket. We simply don't know. In our ignorance, however, it seems fitting to take heart from last week's news. Developments at Rover, Pearson, Lazard, the BBC, and Lloyds position us to prosper. The more we prosper, the better placed we will be to shape events rushing at us at warp speed.

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