So how did we become so attractive to overseas predators? The answer is that it happened in stages, starting with the removal of regulations on overseas investment by former Tory Chancellor Geoffrey Howe in 1979.
This was followed in 1986 by what’s known as the ‘Big Bang’, when a raft of restrictive old practices in the City of London were swept aside. Soon, foreign banks flooded into the City, gobbling up venerable British minnows such as SG Warburg, Robert Fleming and Schroders.
Then came Tony Blair and Gordon Brown, who were so keen to keep in with big business that they refused to block any deals — even when the Russians eyed up British Gas.
Indeed, anyone — like me — who dared question the great British sell-off was instantly labelled a xenophobe, out of touch with the reality of the modern globalised economy.
What tipped the balance towards foreign takeovers in the late Nineties and 2000s were three key factors: the cheap cost of borrowing; liberal takeover rules; and the presence of global investment banks in the City, with ready access to the world’s capital.
Throughout the boom years, these banks were allowed to write their own rules. What this meant, in essence, was that a bank which might once have considered it risky to lend ten times its share capital would now lend up to four times that amount.
The result? Foreign companies took full advantage of all this cheap and easy credit to snap up increasing numbers of great British brands. Not only that, but our eccentric tax system actually made it more profitable for overseas owners to buy companies with borrowed money. For example, foreign firms who buy British companies using borrowed money are able to deduct the interest they have to pay on those loans from their tax bills.
www.thisismoney.co.uk/money/news/article-2129523/How-Britain-sold-half-companies-foreigners.html#ixzz4O7q94ftv
