Firms buck CBI line and back national champions

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The Independent Online

The vast majority of UK businesses back the idea of economic champions and believe the nationality of the owner of a company still matters, according to findings that run counter to government policy.

The snapshot poll of business leaders at the CBI's annual conference yesterday also contradicted the free trade agenda espoused by the employers group.

The votes appeared to endorse a hard-hitting speech in favour of national champions delivered by Jean-Louis Beffa, head of the French building materials giant Saint-Gobain and an adviser to President Jacques Chirac.

He said the Anglo-Saxon model of economic liberalism and freedom of ownership led to short-term investment and greater volatility and instability than the less flexible long-term attitude taken by continental European countries.

Mr Beffa, who advocated the promotion of national champions in a report on technology commissioned by President Chirac, said there was no one single brand of capitalism.

"You have French capitalism, German capitalism, UK capitalism and US capitalism - which is very different from the UK model," he said. "Each brand of capitalism fits the interests of the leading sector in the economy."

He said the French model built on the long history of state support, German and Japanese capitalism were focused on the need for capital equipment, the UK system was based on the success of the British financial services sector. "The only sector that the Chancellor mentioned in his speech was the City," he said.

Mr Beffa said he had great respect for the success of the City and the informal regulation that had made it more successful than US markets but said it increased the pressure for short-term investment.

"There's a feeling that short-term ownership with full rights is bringing volatility and that's why the City is making a huge amount of money," he said. By contrast, long-term ownership delivered greater stability for investment and R&D spending, he said, advocating double voting rights for shareholders of more than two years' standing.

"Each country has to recognise that there is no modern system, like I heard from the Chancellor - that is a backwards, stupid and inefficient system," he said.

An electronic poll of the audience after his speech found 70 per cent believed that the ownership of a company mattered. Some 84 per cent agreed there were such things as national champions and strategic assets.

Mr Beffa also warned a takeover of the London Stock Exchange by Nasdaq would lead to the US culture taking over London whatever steps the UK Government took.

"In the longer term, US ways will have more influence from the SEC [Securities and Exchange Commission] whether we think it will be protected or not," he said.

Richard Lambert, the director general of the CBI, said he disagreed with Mr Beffa, saying it was unclear who should step in to approve or block a takeover for the LSE, or any other company. "The UK has benefited enormously from its open markets and its willingness to accept foreign talent and capital," he said. He highlighted the gap between the UK and the Continent in terms of unemployment, economic growth and flows of economic capital. "I don't think the UK has been damaged by being open-bordered," he said.

Alongside Mr Beffa on the panel were Stephen Nelson, the chief executive of BAA, which was taken over by Ferrovial of Spain, and Andy Bond, head of Asda, the supermarket owned by Wal-Mart of the US.

Both men said foreign ownership had not diminished local executive control and had led to greater investment in capacity and customer service.

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