Margareta Pagano: Is it soft-centred to want Cadbury to stay British?

The French would pull up the drawbridge in a flash
Click to follow
The Independent Online

If you wanted evidence of just how wide the channel really is between Perfidious Albion and Asterix's Gaul, take a look at the huge difference in attitudes the two countries have towards their industry.

In France, President Sarkozy has summoned the head of Renault, Carlos Ghosn, to a crisis meeting at the Lycée this weekend to tell him the new generation of Clios must be built in France and not Turkey as planned. The French government only owns 15 per cent of Renault, a relic from privatisation a decade ago, but is using the stake as a stick to beat up the Renault management to protect jobs at home, more precisely in Flins.

When it comes to economic patriotism, the French don't mess around. Ministers have made it quite clear that the £3bn of loans given to Renault – and Peugeot Citroën – to help them through the crisis last year would have to have a pay-back; that French cars for the French market must be made in France. The stick worked: within hours of the threats, Renault said it was halting production of the Clio in Spain and Slovenia. But Renault already has big operations in Bursa, Turkey, where labour is so much cheaper, and Sarkozy's intervention will blow a hole in its plans to keep production costs low. Sarkozy also plans to tell Renault's boss that he will be appointing six directors to the car-maker's board. It's not hard to guess what the outcome of this weekend's tête-à-tête will be.

Contrast this example of Napoleonic statism with the latest attempts in the UK, by government and unions, to keep Cadbury British and out of Kraft's control. Here, Lord Mandelson, the Business Secretary, doesn't have a stick like his French peers. Instead, he's been trying to use his not unpersuasive skills to sweet-talk Cadbury's big investors into not selling out for quick profits by accepting the US bidder's offer. He has been careful not to appeal to naked protectionism, but rather to play the card that Cadbury is better off long-term as an independent firm.

The unions have dealt a more emotional hand; warning that up to 27,000 jobs could be lost if Kraft wins and moves production overseas. While they are probably exaggerating, there's no doubt that were Kraft – or any other predator, such as Hershey – to win, a new owner might eventually move even more production abroad. You only have to look at what happened to Rowntree after Nestlé acquired it two decades ago, or the disastrous Spanish takeover of Heathrow, to see how foreign ownership is not always positive.

While Mandelson cannot stop the bid, what is interesting is that, for the first time in decades, we are having a lively debate about ownership, and I suspect many shareholders will struggle to decide even if Kraft – or Hershey – comes up with a higher offer. Intellectually, there is no economic argument that justifies keeping Cadbury British – it doesn't matter if it's the Americans or the Brits who are responsible for rotting our teeth.

So what is best: our laissez-faire approach or the dirigiste French one? The numbers suggest that the UK has done well by having open doors – our surplus in 2008 was £27bn. But emotionally, most people feel keeping Cadbury British is a good thing; for all sorts of reasons, cultural as well as sentimental. How much is that worth? That's something the French understand.

Obama set to claw back $90bn from the last bastions of Marxism – the banks

Whether it's the Haiti disaster or bankers' bonuses, Barack Obama really does come into his own when dealing with a crisis. And, unlike so many politicians, he seems to mean what he says. So when Obama said last week that bonuses were obscene, you knew he meant it.

More than that, the President actually did something smart aboutit, not just cracking the bonus culture but reforming it as well, something still woefully missing here. As he put it so cutely: "We want our money back and we're going to get it."

The way he is going to get it back looks pretty cute too. In a nutshell, Obama's new plan will levy a tax over 10 years on 50 or so of the US's biggest financial firms, aiming to recoup some $90bn (£55bn). The tax will be levied on assets, less tier-one capital, and domestic deposits, and will hit firms which rely most on wholesale funding. As it was those banks – Lehman Brothers et al – which got into trouble, this is clearly the right area to focus on. But it also means that giants such as Goldman Sachs and JP Morgan will be hit hard.

The tax is attractive because it makes borrowing in the wholesale funding markets more expensive, reflecting the true cost of risk. That should push up the cost of borrowing, discouraging the excessive risk-taking which so fattened their huge balance sheets in the run-up to the crisis.

In the UK, we have still not broached the real issue of why bankers continue to make so much money. As Anatole Kaletsky wrote in The Times last week, banks are the last bastions of Marxism as bankers raid their firms of the profit which would, in any other business, be returned to those who supply the capital – in this case, us. So as rich bankers guzzle their foie gras, we poor taxpayers nibble at a raw turnip. But the golden boys and girls had better enjoy it while they can, as Obama oh-so-cutely prepares to up-end their banquet.

Book learning Foyles proves care counts more than cost

It's a tale of two copies: at Waterstone's, Cormac McCarthy's cheerful The Road costs £5.59 while at rival Foyles, the best-seller is priced at £7.99. Even though Waterstone's, which is owned by HMV, has been heavily discount its prices, it is struggling.

Over Christmas, the chain saw sales drop 9 per cent and Waterstone's boss, Gerry Johnson, paid the higher price himself last week; he was sacked. By contrast, Foyles's four London bookshops saw sales jump 18.9 per cent in December, selling all its books at the full price. With such ferocious discounting, plus fierce competition from online giant Amazon and now Tesco, the Foyles experience is a vote of confidence for good, dare I say it, old-fashioned, customer-based specialist service. Other retailers should take a leaf out of Foyles book, or perhaps it should consider expanding?

Comments