This article is interesting and a bit depressing. I’ve a lot of respect for the writer, Will Hutton, as I remember reading a prediction he made in 2005 that the financial markets were running a high risk of collapse. He got that one right.
This article, if I’ve understood it correctly, notes that UK investment companies (pension funds, etc.) have massively reduced their investment in UK businesses over the years - from £1trn in 1990 to a tenth of that now. These funds are risk adverse so focus on government bonds. This makes UK companies under-funded and under-valued - so ripe for foreign take over. And we’ve seen lots of that. But worse, this also means the UK is not being funded for growth. And guess what - we’re not growing.
Another article by the same journalist - and if anything, even more worrying.
Here is the things that alarmed me most:
- there is no incentive for UK funds (pension funds, investment funds, etc.) to invest in UK businesses, so no tax benefits, no greater rewards
- only 2% of the value of the FTSE 100 is held by UK funds
- there is a long list of UK tech start ups that have been bought and taken over by non-UK businesses
- risk adverse pension funds focus their money on government bonds - very low yield and not pumping up the value of UK companies
- the UK stock market is hugely undervalued, so much so that companies like Shell are considering leaving London and moving their listing to New York
- crazily the Tory government plans to find ways to kill off National Insurance, rather finding ways of making the government pension fund a key investor in UK start ups
It is shameful that the UK has some of the best universities, some of the brightest and most talented people … and everything else works against the UK creating major technology businesses.
We’ve got the talent and the tech. So why can’t Britain grow its own world-beaters? | Will Hutton | The Guardian
People can even dress up changing the rules to favour UK tech investment as a Brexit bonus for all I care.
Well we are growing and in any case, large western nations are struggling with growth. USA not bad but at the cost of a near $40 trillion state debt!!
UK plc, manufacturing has over-taken France, and over-taken Japan as worlds 4th largest exporter.
Will Hutton is who Orwell wrote of when he said British intellectuals can’t stand the English, in particular it’s culture and the working class, always negative about English history and achievements.
The guy filters positive facts in order to con the gullible. Yes he’s right that pension funds became addicted to Govt Bonds, but he doesn’t explain that this is why the sector crashed the economy when Truss promised to reform this reliance on bonds.
This is what she meant by the Blob running the nation.
I am truly astonished by your comments. It is as, when being pointed to a problem (and a possible solution to that problem) you are very content to dismiss it, point to some loveliness elsewhere - and then for good measure slag off the person who highlights the problem.
You see the observation that UK funds under-invest in the UK (and the associated issues noted in the article) as both dismissible and a criticism of the UK. Why? Do you not think this is a serious issue?
You then go to lengths to find fault in Hutton, who notes this under-investment issue. I would not be so scathing. I recall him, in 2005, highlighting the over-stoking of the mortgage and subprime markets and being one of a very few who were predicting the financial crash of 2007/8. Perhaps you prefer your economic commentators just to feed you happy news “isn’t the UK doing marvelously”.
I prefer to uncover the factors driving gaps in the UK success. This is one such gap and a big, serious one. But if you prefer to ignore it, criticise the messenger and look at your happy statistics then please do so on another thread.
I’ve long found Hutton wanting. Around 2012 on Newsnight he off-handedly said UK manufacturing was heading only one way; down the swanney.
He’s always a pessimist and thus far from capable of assessing reality.
UK pension funds are too reliant on Govt bonds precisely as Truss said.
In the meantime the German anti migrant song is all over social media and yet Hutton type Wets love claiming England is intolerant and suffering institutional everything.
This is not really about Hutton, though is it? Nor is it about intolerance of citizens, social media or Germany. It is about the poor levels of innovation, technology and manufacturing investment by UK pension funds and other investment vehicles.
I know someone who used to work for a tech start up investment fund. This fund focused on university & academic developments that had the potential to make into production. He cited one professor who was a multi-millionaire as he had taken his second product into full production and IPO of the company. This is great but apart from such specialist funds all too rare. At this rate the UK won’t create a tech billionaire or multi-billion valued tech business. Other countries will.
You keep implying we’re somehow failing, so do explain then why we’ve overtaken France to become the worlds 8th largest manufacturing nation.
Sure we can do better but honestly we’re doing fairly good. Worlds 4th largest exporter.
To put our economy in perspective, Italy has had such low growth for nearly 30 yrs, that the Govt bought in selling houses to foreigners for €1. Loads of em.
You claim my metrics on how UK plc is doing are irrelevant, but of course economic measures like where we are in the global manufacturing league, are completely relevant in discovering the reality of our economy.
By all means lets take Liz Truss’s idea of getting pension funds more vested in UK biz.
I’m not implying anything. So don’t put your thinking onto my posts please. Just respond to exactly what is stated.
To help. I do not think that the UK is “failing”. I do think that the UK would be doing better if it were still in the EU. Nothing in all stats about manufacturing or exporting would be diminished by remaining in the EU, and likely would be even better.
The examples I’ve given about the issue I’ve raised (lack of leveraging UK’s strong tech skills and people) remains regardless of any and all of the “goods news for Britain” stories you post. The UK, not just pension funds (which Truss disliked so much she tried to destroy them, the silly moo) but also government, hedge funds and most other investors.
there is one simple answere to all the above , our politicians have no backbone and guts to stick their head out of the sand. Weak government= weak country
I agree lack of backbone is a contributing factor. However I see a lack of any focus on key issues or plan to address them unless they are populist stuff like immigration (maybe that is what you meant of course).
So, for example, this week it has been confirmed that the proposed IPO of Klarna (buy now, pay later tech company) will be in New York. This is because tech stock typically are more highly valued in New York. Its estimated this will be a $20bn launch.
In contrast, although the government knew Klarna was planning an IPO, they have done nothing over many years to try to re-balance the acknowledged under-valuation in London stock markets. Klarna clearly considered London for their IPO as they set up a UK holding company. The UK government clearly new this was possible so tried to make London more attractive. Except their input was to defer and dilute coming legislation on buy now, pay later. They hoped this reduction in consumer rights (how is that a win, exactly?) would be enough. They did not even attempt to address the underlying issues that have made London stock valuations too low, especially in tech stock. Admittedly, by this year, it was probably too late to do anything meaningful - but this simply shows the government have been inadequate for many years now.
The trouble with populism is it implies complex issues can have simple solutions. That notion is only for simple people.
Even the BBC’s Faisal (surname omitted as it appears to flag a.
reason for a post .
be checked by mods) says we’re
‘ doing better than Germany, France et al.
‘
Your claim that EU membership is necessarily going to produce better outcomes is at odds with the evidence.
Everytime I give examples of us doing very well SINCE Brexit, you dismiss the evidence as straying from your narrow position.
Excluding evidence isn’t a rational position for me to adopt when assessing our outcomes.
A quick reminder since Brexit;
Jumped over Japan as worlds 4 th largest exporter.
Jumped to 8th for manufacturing
UK economy is improving but people may not notice.
And here’s the BBC link to out growth outstripping key EU members
The UK is now growing joint fastest in the G7, equal with Canada and outpacing France, Germany, Italy, Japan and the United States.
Sorry my screen is jumping all over the place and I can’t place the link where I wanted
If the UK is doing so well since Brexit then why is it so few can feel the benefits?
Oh, and as Dianne shared elsewhere your data seems to be a bit wrong. Which is not to deny some successes - but the UK does not feel like a success story. Where’s the impact on ordinary people. Its just not there.
The logic for “would have done better if still in the UK” is that exports are down into the EU for goods - but up elsewhere. The drop in EU exports is a direct result of exiting the EU and the barriers to trade that this created.
But this thread is about under investment in UK, especially in the tech sector. There is another thread called “majority if people think Brexit is a failure” that is the right place for this chat. And the right title for such a chat.
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Why do I look at the evidence both here and abroad before embracing ‘well why don’t Brits feel better about things’?
It’s only by looking to other fields to know whether ours is less green
We can look at nations run by lefty liberals in order to get a sense of outcomes and how Labour may produce similar outcomes with very similar politics.
Australia has nothing but citizens complaining about soaring rents n cost of living. Canada the same. NZ just ditched their Labour Govt as has Portugal.
To the dreamers among you; why on earth will Starmer be any better?
Again, you are well off topic for this thread. I had hoped that this thread would discuss a serious issue in the UK. I do not have a problem if no-one wants to contribute on this issue. I do care that you want to make the thread about something else. Please set up your own thread on your own topics.
Back on topic and with a genuine reason to have hope for UK investment and shares. The fast fashion discount sales web site Shein is to launch its IPO in the UK with an initial listing valuation of £50bn. A success for London after Klarna opted for New York. Lets hope (1) its the start of a trend and more money comes into London, (2) its as much UK funds buying into this IPO as it is overseas money, (3) Shein reduces their reliance on disposal fashion.