This merger is not worth going to war over

COMMENT

Will Washington and Brussels really go to war over Boeing? Although the stand-off is plainly serious, as the flexing of political muscles on both sides of the Atlantic demonstrates, the betting must still be on one or both parties blinking before it is time to scramble the bombers.

Here's why. Although the European Commission has stuck rigidly to its line that Boeing's takeover of McDonnell Douglas will distort competition, it will do no such thing. The European Commission has spotted an opportunity to squeeze maximum advantage out of the situation for its own jet champion, Airbus Industrie, and is playing its hand accordingly.

In truth, there are really very few anti-trust considerations involved, as the US Federal Trade Commission has already ruled. True, the merger would increase Boeing's share of the commercial airline market but only by 4 per cent. Moreover, even after swallowing up McDonnell Douglas, Boeing would still be left with a smaller share of the market than it enjoyed 10 years ago, thanks to the inroads Europe's Airbus Industrie has made.

When the Boeing deal was first unveiled there was barely a squeak from Airbus. Indeed the view trickling out of Toulouse then was that the merger might actually work to its advantage by creating a more orderly market and reminding the world's airlines that if they still wanted a choice then Airbus was the only other player in town.

Since then there has been much comment in Brussels about how Boeing's scope for sweetheart exclusive supply deals with airlines would be enhanced. But will carriers really want to freeze Airbus out? The lesson of how Boeing has ruthlessly exploited its monopoly of the jumbo jet market for the last two decades is one that will not be forgotten quickly by the airline industry.

For all that, the Commission's objections to the deal do not seem fundamental enough to go to war over. However, that is not going to stop Brussels using the deal as a pretext for prizing concessions out of the Americans in other areas - starting with a tightening of the rules governing the support given to their aerospace industries through the enormous research programmes run by the US Defense Department and Nasa.

This is not the first trade dispute between the two blocs and it will not be the last. The good news is that since there are no principles at stake, they should be able to horsetrade their way out of the current fix.

People must be forced to save for old age

There is something particularly irritating and holier than thou about the way Harriet Harman, social security minister, bangs on about having "inherited" a huge pensions challenge from the previous Government, as if her predecessors never bothered to think about it. Unfortunately, waving one of New Labour's strategic reviews, magic wand like, over the problem is not going to solve it. Nonetheless, if having a review helps everyone come to terms with the inevitable and all too painful conclusion that people must be "forced" to save for their old age, then it is only to be welcomed.

Strangely enough, the pensions problem faced by Britain is the exact opposite of the one that exists in Germany, France and Italy. The problem in Britain is the inadequate nature of the state pension - which is nowhere near a living wage - and the fact that a very significant proportion of the workforce fails to make any further provision for retirement. Forcing the pensions industry into providing better value for money, security and flexibility, as the OFT this week proposed, would certainly help matters, but it doesn't provide a solution in itself.

On the Continent the promised benefit of pay as you go pension arrangements are by comparison very generous, but the tax raised to pay for them increasingly inadequate. It is hard to know which is the more difficult problem. In Britain the challenge is to find ways of improving retirement benefits for all without significantly adding to the tax burden; on the Continent it is that of cutting benefit to a level governments can afford. Either way, however, the challenge faced by politicians is broadly similar - it is that of persuading the public that if they want reasonable pension benefits for all, they are going to have to pay for them.

Whether this is done through the state, or the private sector, is largely irrelevant. The bottom line is that people will have to be compelled to save. Unfortunately, that is always bound to look like a form of taxation. In grasping this nettle, Peter Lilley's much maligned proposals for privatising the state pension and changing it from a pay-as-you-go scheme to a funded investment approach, provides a useful blueprint. After the political capital Labour made out of these proposals during the election, the new Government couldn't possibly use the plans in the way intended, as a substitute for the basic state pension.

Suitably rejigged, however, they could be used as a way of providing reasonably fair second tier pension arrangements. The justification for compulsion in pensions provision is an obvious one. Without compulsion, it is those who save voluntarily who are forced to pick up the tab for those who don't. Even so, this is not going to be an easy thing to sell to the electorate. Ms Harman's review might ease the process, but it doesn't make it any more palatable.

M&S deal may be small but it's also significant

So, conservative old Marks & Sparks is stumping up nearly pounds 200m for 19 branches of crummy old Littlewoods. Is this a sign of a new, more aggressive expansion from the behemoth of Baker Street?Or just another example of relentless, measured growth by the Rolls Royce of British retailing?

It is certainly a rare occurrence. M&S has not done a major deal since Brooks Brothers in the heady days of the 1980s. This is obviously not a huge transaction for M&S, but it is not without significance all the same. There are not many opportunities to snap up this amount of prime high street retail space and M&S seems to have moved swiftly to beat off rivals likes of Boots and Kingfisher.

Obviously, this is more of a property deal than anything else. There is no goodwill write-off, and no redundancies or stock write-offs to worry about. All that is for Littlewoods. M&S simply gets 19 new stores, changes the name over the door, gets the refurbishment people in and away it goes.

In fact this deal says a lot more about Littlewoods than it does about M&S. Having failed to flog the high street stores as a job lot it is now selling its biggest, and in many cases, best stores, to a rival. It will be left with around 100 smaller branches which it may or may not rebrand under the Berkertex name. With the deal to buy Freemans home shopping from Sears still subject to an extended MMC inquiry and a pools business under the cosh from the lottery, Littlewoods seems beset on all sides with problems. James Ross, the chairman, faces the prospect of his revised strategy for the group going up in smoke. Since the controlling Moores family are not exactly backwards in letting management know what they think, it could be an interesting few months in Liverpool.

Suggested Topics
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
Arts and Entertainment
The Tour de France peloton rides over a bridge on the Grinton Moor, Yorkshire, earlier this month
film
Life and Style
fashion Designs are part of feminist art project by a British student
PROMOTED VIDEO
News
Very tasty: Vladimir Putin dining alone, perhaps sensibly
newsJohn Walsh salutes those brave souls who have, throughout history, put their knives on the line
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
i100
News
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
Life and Style
food + drinkZebra meat is exotic and lean - but does it taste good?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
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
Voices
voicesSiobhan Norton on why she eventually changed her mind
News
i100
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
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?

Should emergency hospital weddings be made easier?

Some couples are allowed emergency hospital weddings, others are denied the right. Kate Hilpern reports on the growing case for a compassionate cutting of the red tape
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
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
Why do we have blood types?

Are you my type?

All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
Honesty box hotels: You decide how much you pay

Honesty box hotels

Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit