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Any other business

Am I a Remain roundhead, or a Brexit cavalier?

Also in Any Other Business: the LinkedIn deal, the EMI battle, prospects for Brexit pork, and panic in the bond market

18 June 2016

9:00 AM

18 June 2016

9:00 AM

My pen hovers — but refuses to touch the postal ballot paper. I pour a drink (I won’t say whether claret, schnapps or English ale) and break off to watch Versailles, with its parade of lecherous continental backstabbers. The blood stirs, but still I cannot choose. So I defer the moment of decision, Remain or Leave, until after a short trip to France…

Middle-aged match

Meanwhile, business as usual. Microsoft is spending $26 billion to acquire LinkedIn, the social network for job-seekers. That looks a crazy price for a venture which lost $166 million last year on revenues of $2.9 billion and has never been regarded as cool. But what Microsoft is really buying, at $60 per head, is access for cross-selling to LinkedIn’s 430 million users in the hope of boosting its own flagging growth. Both brands feel middle–aged these days, so maybe they’re well matched. Microsoft boss Satya Nadella is also betting LinkedIn will endure, unlike networks such as Bebo and MySpace, which were bought by giants before shrinking to nothing. Frankly, who knows: I’ve never bothered to join LinkedIn myself, partly because requests to connect are invariably from total strangers. But I’ll bet LinkedIn will have faded in five years’ time, and the deal will be seen as a point of decline for once-invincible Microsoft.

Hands off

Speaking of overpriced deals, who knew Guy Hands was still suing Citigroup over his 2007 acquisition of EMI? In brief, Hands’s private equity firm Terra Nova bought the music group for £4.2 billion, funded by Citi. But EMI’s business model was already failing and huge losses followed. Citi’s loan covenants were triggered; the bank took over EMI and sold it to Universal and Sony, while Hands claimed Citi had given him fraudulent advice and Citi claimed Hands was suffering from ‘buyer’s remorse’.

Hands himself is thought to have dropped £160 million on the EMI episode. Though he’s still rich, there could hardly be a more vivid example of hubris. This was the man I described as ‘the Midas of the 1990s City’ for his lucrative dealings in pub chains and privatised railway rolling-stock. A chum of William Hague’s, he was tipped to be ‘enterprise guru’ in a future Tory government. But Terra Nova is best known today for an investment many regard with special distaste: its ownership of the Four Seasons care-home chain. Hands took himself grumpily into Guernsey tax exile in 2009 and has not come back. Ah well, I suppose he can always find new opportunities on LinkedIn.

Pigs might fly


In strike-bound France the mood is made gloomier by constant rain and not boosted by Euro 2016, in which the main story is not the football results but the fighting between English and Russian hooligans. The butcher’s wife greets me with ‘The economy’s bad, no one’s buying anything’ — putting me right off her charcuterie. But she has missed the only cheerful story in Le Figaro, which reports that wholesale prices for Breton pork are up by 23 per cent since December thanks to a doubling of demand from China. Behind this surge are health and environmental rules imposed on Chinese farmers that have afflicted local production and caused import demand to soar.

An opportunity for eager British exporters, too? Yes indeed, and the good news, according to FarmingUK, is that our pork exports to all non-EU countries were up ‘more than half, the fastest growth of any member state’ in the first quarter compared with last year. So we’re winning the global race to feed the 40kg-a-year pork appetite of new-rich Chinese? Not quite: our export volumes are still a fraction of those of Germany, Spain and Denmark and well behind the Dutch, the French and the Poles. Pigs might fly to China, but they won’t save our post-Brexit bacon.

The moment of decision

Over a 6 a.m. Guinness at Leeds Airport, surrounded by Welsh football fans heading for Bordeaux, I read last week’s Brexit ping-pong between Matthew Parris and Daniel Hannan — and still I’m not sure. Should I decide on grounds of political philosophy, economic self-interest, the greatest good of the greatest number, or fear? Should I heed the wise banker Lord Leach, who died this week, on the irredeemably anti-democratic nature of the EU? What of tycoons such as  Lord Bamford, Sir James Dyson and Tim Martin of Wetherspoon’s pubs, who have spoken for Brexit: surely these brilliant risk-takers know what’s best for us?

Or maybe I should be terrified by the bond market, which Bill Clinton’s adviser James Carville famously said was ‘more important than the fucking Pope’? Yields on German, Japanese and UK government bonds have fallen to record lows, some into negative territory, as investors spooked by rising Brexit sentiment have chased safe-haven paper. But while UK gilts have been part of this bubble, investors have moved £65 billion in various asset forms out of the UK in a two-month period, in anticipation of a sharp fall of the pound on 24 June.

That’s if we vote Leave, of course. Brexiteers acknowledge there will be turbulence before we reap the golden harvest they foresee. Markets, on the other hand, are signalling that short-term chaos is a certainty but long-term outcomes are unknown; that Brexit — on top of a global slowdown, a huge build-up of debt, uncertainty about interest rates and all the rest — is another  bundle of risks the world could do without.

Yes I know, it’s our destiny, our choice: international investors can go whistle. But in the end markets are right for once.Brexiteers are cavaliers, hooligans, believers that chaos can lead to something better. Me, I’m a roundhead, a rationalist, an internationalist, a believer in co-operative muddling through. The pen hovers again, then swoops. Reader, I voted Remain.


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