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Is British business gradually being taken over by foreigners? The mobile phone company O2 has received a £17.7bn take-over bid from Telefonica. It seems likely that this huge company, one of the top 100 in the country, will be bought by the Spanish firm. Then four of the five mobile networks in Britain will be owned by foreigners.
Foreigners are also taking an interest in our banks. The high street bank Abbey was taken over by Banco Santander last year. A number of big utilities are now owned by foreign companies too.
Why should this be happening? Did someone put a 'for sale' sign up on Great Britain plc?
One possible explanation may sound arcane but has the virtue of being logical. When Gordon Brown became Chancellor of the Exchequer in 1997, he introduced higher
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Gordon Brown’s taxes leave us - and 02 - vulnerable to speculation from overseas. By james bartholomew |
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taxation of dividends received by pension funds, Personal Equity Plans and Individual Savings Accounts.
By doing this, Mr Brown reduced the value of British shares to British
investors. That is because the value of shares in the long term is decided
by the value of the dividends (and any capital payments). If that net value is reduced by tax or anything else, the value of the shares is less.
This is part of the explanation of why British shares have performed so badly since 1997.
But while the value of British shares to British investors is now lower, the value to foreign companies has not changed. So British shares now look relatively more attractive to these foreign companies than to British investors.
It seems that Mr Brown might have been the one who put up that 'for sale' sign. 
FIRST POSTED NOVEMBER 2
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