EU holds key to inward investment `miracle'

COMMENT: `Overseas investors are such a feature of the landscape that if they all upped sticks and left en masse they would blow a gaping big hole in the economy'

Another day, another election opportunity for ministers, whose main job these days seems to be that of trumpeting the Government's successes. Yesterday it was Britain's record on attracting inward investment. In the event, the President of the Board of Trade, Ian Lang, was tucked up in bed blowing his own nose, having been struck down with the flu, so the honours were left at short notice to his departmental junior Anthony Nelson.

The trumpet Mr Nelson blew at yesterday's Social Market Foundation seminar in London was truly an impressive one. When it comes to attracting foreign money, no one does it better than Britain. More than half- a-million jobs created since 1979, a role call of multinationals that would turn any regional development agency green, 40 per cent of all Japanese investment into Europe, and not just because of the golf.

In fact, overseas investors are now such a feature of the landscape that if they all upped sticks and left en masse they would blow a gaping big hole in the economy. They account for half all manufacturing investment, one-fifth of employment, a quarter of output and 40 per cent of visible exports, sorry, goods sold overseas.

The secret of this runaway success, so Mr Nelson tells us, is Britain's deregulated labour market. While we are basking in the lowest level of strikes in more than a century, the Germans and the French are fleeing to Britain from the social costs imposed on business by their own governments. No surprises for guessing what happens to the paradise land if Labour gets in. Interference, intrusion, the return to corporatism and a pipeline called the Social Chapter positively bulging with fresh untold horrors.

Some of this may be true. Some of it may even be to the point. But the bigger truth that Mr Nelson singularly failed to address yesterday is that Britain's prime position as a location for inward investment will, in future, depend crucially upon its relationship with the rest of Europe.

Most of the provisions of the Social Chapter would have little or no effect on the type of companies that invest here, because they have already taken them on board. What the likes of Siemens, Toyota and BMW really want to know is whether Britain is heading for further integration into Europe, full isolation or a suspended state of semi-detachment.

The answer to that will have a much bigger bearing on our ability to repeat the inward investment miracle of the past 20 years than any number of new laws to deregulate the labour market.

Phoenix sticks with its niche market

The great bull market in investment bankers continues unabated. Hot on the heals of NatWest Markets' purchase of Hambro Magan come the Americans to snap up another of London's corporate finance boutiques, Martin Smith's Phoenix Group. The amount being paid is apparently not significant enough to warrant a formal Stock Exchange announcement by Donaldson, Lufkin & Jenrette in the US, but at a likely pounds 30m-pounds 40m paid mainly in shares, it ain't bad for a company which employs less than 30 people. Hambro Magan, with little more than double the number of staff, went for around pounds 100m.

Deal-making is a glamorous business and the smaller niche players like Phoenix have managed to be very successful at it in recent years, slipping in under the noses of the bigger investment banks to steal a march and some very significant transactions. The merger of United Friendly and Refuge Group is probably one that Phoenix would rather forget, but there have been plenty of others jealously regarded by bigger City competitors. Corporate clients like the personal touch, the attention to detail of senior people and the specialisation in particular sectors that these boutiques can offer. But are they really worth this kind of money?

Investment banking is, on the whole, a poor business to be in. For all but a few very large international players, returns are mediocre to poor, even in boom years like the one just past. However, it seems possible that in companies like Phoenix and DLJ, which claims to be a much larger Wall Street version of the same thing, we are witnessing the arrival of a new, faster moving form of investment banking where valuations of this sort can indeed by justified. DLJ is the most profitable part of the Equitable/Axa stable in the US, a position it has achieved by shunning the big commodity- driven securities markets, and concentrating instead on higher margin specialist markets.

Phoenix has probably found a rather better home for its talents than Hambro Magan, whose corporate financiers are rather awkwardly being integrated into the NatWest Markets behemoth. Hambro Magan took the view that the age of the niche domestic player is largely over, that access to capital and international markets will be the future stock in trade of the successful investment banker. Phoenix is going the other way. Even within the larger Wall Street investment bank, specialisation will remain its hallmark and it will continue to avoid involvement in the main European securities markets. At this juncture at least, it looks as if Phoenix has probably chosen the more rewarding approach.

Stagecoach rides into the headlines again

Stagecoach grabbed the headlines again yesterday as the golden egg that is Porterbrook Leasing was finally laid. Those rail managers and City bankers who had the foresight to spot a bargain in Porterbrook and then swop it for Stagecoach's cash and equity will make millions out of yesterday's sale of most of their shareholding in Stagecoach.

But the more intriguing question is why sell out now through UBS's fancily entitled accelerated global tender? Do they, by any chance, reckon that they are selling at the top of the market?

Stagecoach has enjoyed a meteoric rise over the past 12 months, more than doubling in value since the start of last year. Even after yesterday's 21.5p slump - a fall of some 2.5 per cent - its shares are trading about 250p above their level at the time of the Porterbrook deal.

But these are increasingly tricky times for Stagecoach and its chairman Brian Souter. The day before yesterday he was told his bid for ScotRail would be sent to the Monopolies Commission before he even knows if he is the preferred bidder. Further on the horizon, but not that far away, is the prospect of a Labour government and tougher regulation of the bus industry than Mr Souter has thus far been accustomed to.

Charterhouse, the investment bank that financed the Porterbrook deal and is the main seller in the UBS tender, is keeping an uncharacteristically low profile about the whole thing. That is partly to do with the personal fortunes that some of its executives will make out of it. But when did it last dispose of such a large slug of its quoted equity portfolio in one go? This may prove a rather more difficult tender than UBS thinks.

Voices
voicesGood for Lana Del Rey for helping kill that myth, writes Grace Dent
Sport
The Pipes and Drums of The Scottish Regiments perform during the Opening Ceremony for the Glasgow 2014 Commonwealth Games at Celtic Park on July 23, 2014 in Glasgow, Scotland.
Commonwealth GamesThe actor encouraged the one billion viewers of the event to donate to the children's charity
Sport
Karen Dunbar performs
Entertainers showcase local wit, talent and irrepressible spirit
Arts and Entertainment
The Tour de France peloton rides over a bridge on the Grinton Moor, Yorkshire, earlier this month
film
PROMOTED VIDEO
Life and Style
fashion Designs are part of feminist art project by a British student
News
Very tasty: Vladimir Putin dining alone, perhaps sensibly
news
Life and Style
Listen here: Apple EarPods offer an alternative
techAre custom, 3D printed earbuds the solution?
News
The University of California study monitored the reaction of 36 dogs
sciencePets' range of emotions revealed
Arts and Entertainment
The nomination of 'The Wake' by Paul Kingsnorth has caused a stir
books
News
Joining forces: young British men feature in an Isis video in which they urge Islamists in the West to join them in Iraq and Syria
newsWill the young Britons fighting in Syria be allowed to return home and resume their lives?
News
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
i100
Life and Style
food + drinkZebra meat is exotic and lean - but does it taste good?
News
Bey can do it: Beyoncé re-enacts Rosie the Riveter's pose
newsRosie the Riveter started out as an American wartime poster girl and has become a feminist pin-up. With Beyoncé channeling her look, Gillian Orr tells her story
Life and Style
Donna and Paul Wheatley at their wedding
healthShould emergency hospital weddings be made easier for the terminally ill?
Arts and Entertainment
Residents of Derby Road in Southampton oppose filming of Channel 4 documentary Immigration Street in their community
tv
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

PMO Analyst - London - Banking - £350 - £400

£350 - £400 per day: Orgtel: PMO Analyst - Banking - London - £350 -£400 per d...

Cost Reporting-MI Packs-Edinburgh-Bank-£350/day

£300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...

Insight Analyst – Permanent – Up to £40k – North London

£35000 - £40000 Per Annum plus 23 days holiday and pension scheme: Clearwater ...

Test Lead - London - Investment Banking

£475 - £525 per day: Orgtel: Test Lead, London, Investment Banking, Technical ...

Day In a Page

Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
Climate change threatens to make the antarctic fur seal extinct

Take a good look while you can

How climate change could wipe out this seal
Should emergency hospital weddings be made easier for the terminally ill?

Farewell, my lovely

Should emergency hospital weddings be made easier?
Man Booker Prize 2014 longlist: Crowdfunded novel nominated for first time

Crowdfunded novel nominated for Booker Prize

Paul Kingsnorth's 'The Wake' is in contention for the prestigious award
Vladimir Putin employs a full-time food taster to ensure his meals aren't poisoned

Vladimir Putin employs a full-time food taster

John Walsh salutes those brave souls who have, throughout history, put their knives on the line
Tour de France effect brings Hollywood blockbusters to Yorkshire

Tour de France effect brings Hollywood blockbusters to Yorkshire

A $25m thriller starring Sam Worthington to be made in God's Own Country
Will The Minerva Project - the first 'elite' American university to be launched in a century - change the face of higher learning?

Will The Minerva Project change the face of higher learning?

The university has no lecture halls, no debating societies, no sports teams and no fraternities. Instead, the 33 students who have made the cut at Minerva, will travel the world and change the face of higher learning
The 10 best pedicure products

Feet treat: 10 best pedicure products

Bags packed and all prepped for holidays, but feet in a state? Get them flip-flop-ready with our pick of the items for a DIY treatment
Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

Noel Fielding's 'Luxury Comedy'

A land of the outright bizarre
What are the worst 'Word Crimes'?

What are the worst 'Word Crimes'?

‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
Can Secret Cinema sell 80,000 'Back to the Future' tickets?

The worst kept secret in cinema

A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Facebook: The new hatched, matched and dispatched

The new hatched, matched and dispatched

Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements