"The banking sector seems destined to become the latest target for foreign predators seeking British prey. Even Royal Bank of Scotland, valued at a mountainous £58.5bn, doesn't seem too big a beast to hunt, such is the fevered state of imagination among traders in attempting to spot the next big one.
Possible? Well maybe, though perhaps only Citigroup would be both big and unencumbered enough in terms of its overlapping interests to mount such a monster bid. None the less, it shouldn't altogether be discounted. UK plc appears to be up for sale and, in these markets, no one's too large to remain immune, even such a stalwart of the British banking system as RBS.
Rather more credible, however, are the smaller fry, and particularly the mortgage bank Alliance & Leicester, which has been on the radar screen for bids for as long as anyone can remember. As our story on page 58 reports, A&L has already had one approach, pitched at a putative £13 a share, from Crédit Agricole of France. If this were to break cover, Banco Santander wouldn't be long in following suit. They might even bid jointly."
And my worries are far from assuaged when I read stuff like this in The Guardian:
"Finally, there is the matter of whether the liberal approach actually works. It definitely works for the movers and shakers of the financial sector, though it is harder to find evidence of benefits to the economy as a whole. Take the question of research and development, a subject close to Gordon Brown's heart. One of the arguments against foreign takeovers in the 1980s was that they would turn Britain into a screwdriver economy, with R&D taking place back at company HQ in Detroit or Osaka. The government's latest data seems to bear out these fears. More than 50% of the UK's R&D is accounted for by just two sectors - pharmaceuticals and aerospace - and they just happen to be the two in which the government retains some control through the NHS and the Ministry of Defence. In other sectors, Britain is nowhere.
Work by Karel Williams and his colleagues at Manchester University has shown that big mergers and takeovers have had no impact on company performance. Over the past 25 years sales and profits of FTSE 100 companies have risen by about 3% a year - broadly in line with the growth rate of the economy - but salaries in the boardroom have gone up by 25% a year. Where share prices have gone up, it is not usually the result of a new broom sweeping clean but more often of lower interest rates and irrational exuberance...
Modern Britain is a Shangri-la for speculators in which firms are there to be bundled up and bought and sold. Keynes warned us many years ago: "Speculators may do no harm as bubbles on a steady stream of enterprise ... But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a byproduct of the activities of a casino, the job is likely to be ill-done."
So how well is the job being done? Here's a test. Which country out of Germany, France and the UK has seen manufacturing output stagnate since 1997 and is now running a trade deficit of 6% of GDP? Clue: it's not Germany. Or France."
I appreciate that the UK may nevertheless - at least for now - be doing better than France or Germany in terms of economic growth and of employment. But should we be concerned about the overall picture?