RUTH SUNDERLAND: Weak pound spurs raids on British companies

An unfortunate side effect of sterling’s weakness is that it will provoke even more predatory attacks on British businesses.

Overseas buyers with sharp elbows scurry around the UK stock market like bargain hunters in the aisles of TK Maxx.

A slew of leading tech companies took a hit this summer, including cybersecurity operator Darktrace and IT firm Micro Focus.

They won’t be the last. Making sure Britain isn’t robbed of corporate jewelry is Jacob Rees-Mogg’s job. The new company secretary can stop harmful takeovers thanks to the National Security and Investment Act, which came into effect this year.

The question is, will he use them?

Its predecessor, Kwasi Kwarteng, took a dovish line. It’s unfair to jump to conclusions about Rees-Mogg, who barely got his shoddy feet under the desk. One of his first acts, however, was the acquisition of Inmarsat worth £5.6 billion by an American rival. Another satellite company, OneWeb, which is partially government-owned, is about to be sold to the French state-backed operator Eutelsat.

These deals are in flux, although satellite technology is a major UK asset. In the case of Inmarsat, Rees-Mogg pushed for “cures” such as guarantees for more R&D spending and skilled jobs here. But these commitments can be meaningless.

US private equity barons at Advent International took over British defense firm Cobham with several such lenient insurance policies. It didn’t stop them from chopping up their prey within 18 months. Yet the government does not seem to have learned any lessons. Advent has been given the go-ahead to acquire Ultra Electronics, which makes submarine-hunting technology, for £2.6 billion. It is now considering diving into the fraud prevention technology specialist GB Group.

As a result of government shrugs, much of Britain’s defense industry is in the hands of American investors. Although we have long been allies, this surrender of independent national wealth and stewardship is extraordinary.

Since the Big Bang in the 1980s, the UK stock market has probably been the most open to foreign capital. In some cases this was fantastic. European companies such as Akzo-Nobel, which bought ICI’s old paint businesses, have been major owners, as have some German and Japanese players in the automotive industry.

But very little effort has been made to distinguish between responsible long-term buyers and pirate opportunists. Shareholders in the city are often accused of not appreciating or even understanding engineering and technology. And ministers tend to see overseas takeovers through their own narrow lens.

Do you remember British Steel? It was on the brink of collapse in 2019 and threatened to collapse with the loss of thousands of jobs. The government welcomed a Chinese takeover with open arms, despite obvious dangers.

The next big deal to cross Rees-Mogg’s desk is the purchase of the semiconductor company Newport Wafer Fab by China-backed Nexperia. He should admit the folly of letting China keep control and cancel sales.

Politicians are tempted to swing by big deals for credit: it allows them to claim that their policies have made the UK attractive and open to business thanks to them.

Kwarteng’s Big Bang 2.0 in the City and its pursuit of growth can drive this momentum. But real growth requires support for UK technology, innovation, research and jobs. Selling fire to foreign looters is not a path to prosperity.