The Melrose takeover of GKN for £8 billion (HERE) encapsulates the British problem as we head into Brexit in an attempt to become the world's greatest global trading nation. GKN will now be broken up to create "value" - as in making a fortune for the managers and shareholders of Melrose and enriching the hedge fund shareholders of GKN itself. Melrose prides itself in buying and selling companies in a five year period during which they are "turned round" - as in asset stripped, broken up and sold off.
The British problem I am speaking of is the strange belief that people outside a business or industry, usually financiers or accountants, somehow know how to manage that business better than the people who have been managing it for years. It is the idea that the problems faced (whatever they are) can be best dealt with by people who have no experience of them at all. In fact, it is this very lack of experience that qualifies them to do it!!
What is surprising to me and perhaps ought to be to others, is the Melroses of this world do not seem to know how to start up successful businesses from scratch. Where are the multi-billion dollar companies started from nothing? The Googles, Intels, Microsofts, Apples, Teslas and Amazons backed during years of huge losses by British hedge funds? They only know how to break up other people's businesses. This is what we're good at in this country.
But we are perhaps just beginning to see the impact of Brexit starting to be felt. Car production fell in February (HERE) because of a 17% fall in domestic demand. Although output dropped only by 4.4% because of exports - ironically mainly to the EU!
The next twelve months will be crucial to Brexit. If the economy slows further or big manufacturers announce plans to pull out because of Brexit there will be a chance to stop it before March 29th next year. But if we actually leave and get into a transition period reversing Brexit will be much, much harder. Last Thursday on Newsnight, Evan Davies chaired a focus group in Nottingham and three people had changed their mind since the referendum but two were remainers who now thought we should leave! Stunning!!!
It was dispiriting to hear so much muddle talked about Brexit but one feels there is no alternative but to leave and go through a lot of turmoil at huge cost and to reapply later.
The only highlight of the Newsnight programme was when a majority said if it all went wrong they would blame the UK and not the EU. A few actually thought the EU would be to blame for not giving us what we want - the old British exceptionalism has to be drawn like a poison.
