David Prosser: Who would want to buy Royal Mail?

Outlook In getting through legislation for the privatisation of Royal Mail last week, the Coalition Government achieved a success that has eluded its predecessors for the best part of two decades. And that was the easiest part of the process.

Yesterday's update underlines just how difficult it is going to be to get this privatisation away, even though ministers have already agreed to saddle the taxpayer with Royal Mail's £4.5bn pension-fund deficit – and to write off £1bn of debt owed to the nation.

The first problem is that taking on those liabilities requires State Aid clearance from the European Union, with Royal Mail's rivals already spoiling for a fight. But even assuming it can sweet-talk Brussels, what does the Government think investors will see in Royal Mail, particularly in thecurrent climate for IPOs, which, to put it mildly, is not welcoming?

The picture painted yesterday was of a business in a much sharper decline than many analysts had realised – of a company struggling under the yoke of the universal service obligation and ever-diminishing margins. That's before the costs of reducing the workforce yet further – not to mention the threat of a bitter industrial-relations dispute over job losses.