David Prosser: French protectionism might make us smile, but it is still dangerous

Outlook: Britain may stick by its liberal approach to clearing foreign takeovers of domestic companies, but others will heed calls for bars on overseas buyers
Click to follow

The banknote printer De La Rue finally secured the appointment of a new chief executive last week – Tim Cobbold will join in January – but it has yet to fight off the unwanted attentions of France's Oberthur, a smaller rival that is trying to buy it. And while it might be tempting for Mr Cobbold to play the patriotism card – do people want a French firm making sterling banknotes? – the chances of getting Vince Cable, the current Business Secretary, to intervene on national interest grounds look thin, just as they would have done under his predecessors.

How De La Rue's new boss must wish he lived in France, where ministers continue to take aslightly more nuanced view of what constitutes national interest. Famously, the French once prevented a famous takeover of Danone on the grounds that the dairy company was a strategic asset, and judging by the kerfuffle surrounding Ingenico, they are continuing to take a tough line with foreign buyers.

Ingenico is one of the world's leading electronic payment services companies, specialising in chip-and-pin technology, and has seen its share price soar in recent days amid bid interest from Danaher, an American company. But yesterday, the French press reported that the Government had plans to block the takeover, on the grounds that point-of-sale technology such as Ingenico's chip-and-pin card readers are strategic. Ministers then appeared to confirm the stories and Danaher's bid now looks doomed.

Given that Ingenico provides its products and services to clients all over the world, it can hardly be said to be a keeper of French secrets. Nor do till accessories count as strategic by any standard definition of the term (though they do play a more crucial role in oiling the wheels of commerce than Danone's yoghurt). This looks like a straightforward case of protectionism.

In this, France is hardly alone. Canada, for example, has just prevented the takeover of Potash by BHP Billiton, the Anglo-Australian mining giant. There are plenty of other places where governments take a dim view of foreign buyers.

Still, protectionism will, in the end, prompt a reaction. Britain may stick by its liberal approach to clearing foreign takeovers of domestic companies longer than most, but as more countries give into calls for more blocks on overseas buyers, or other action against foreign companies, free trade and open markets will suffer. The French approach might prompt some wry smiles, but it is not acceptable.



The bankers appear to be staying in London

So much for the great exodus. The saga of JP Morgan's new European headquarters has been one of the flashpoints in the tension between the need to regulate banks more closely and the need not to damage the competitiveness of the City. All year, there have been rumours – none of them denied – that the US bank was so cross about the way Britain has raised taxes on the financial services sector that it was now tempted to go back on its plan to build a new European headquarters in London.

Had JP Morgan wished to make its anger known, it would have been difficult to think of a more public protest than pulling the plug on a crucial commercial property project and relocating thousands of staff to another European city. Yesterday, however, it passed up on the opportunity. Not only is it going ahead with the development of the project it has always planned, but it is also buying the London office of Lehman Brothers.

What could have been the most visible sign yet of a backlash against the regulatory clampdown on the banks has turned into the opposite. JP Morgan has just added to its already significant commitment to London.

There are two explanations for what appears to be a u-turn. One is that the undoubted anger of the banking sector about additional regulatory burdens, particularly around remuneration, has not, despite all the noise, been sufficient to do real damage to London. Indeed, while there has been some anecdotal evidence of a handful of departures – the likes of small hedge fund operations with tiny numbers of staff – there is nothing to suggest large numbers of bankers are leaving.

Alternatively, could it be that JP Morgan has secured assurances from the Government that further attacks on the City will be kept to a minimum? Yesterday, George Osborne could not make a meeting billed as a showdown with the banks because the snow left him stranded in the US, where he had been promoting London as a financial centre in talks with Wall Street bosses. A telling irony, one might conclude.



Smaller retailers to suffer the most

With yesterday's footfall figures for the weekend confirming expectations that the weather was another big blow to struggling retailers, it was no surprise to see shares in companies such as Next and M&S marked down. But the pain will not be distributed equally.

For example, the decline ofin-store sales that began with the first bout of wintry weather has been accompanied by an upswing in online sales – blocked from getting to the shops, many people turned to the internet. That's good news for the largest retailers, which tend to have better developed online operations, but less happy for the independent sector.

Also, some spending has been delayed rather than cancelled. Fewer big-ticket sales may be booked, because the VAT rise to come will be more visible, but Christmas has not been cancelled. Pubs and leisure groups, by contrast, have seen business lost for good.

The point is the doom and gloom about retail may not prove justified – indeed, the initial figures for the first half of December were better than you might expect. Don't write the high street off just yet.

Comments