Return of public ownership: Debt-fuelled Royal Mail deal is a bail out waiting to happen, writes ALEX BRUMMER

[POSTMAN]

https://www.dailymail.co.uk/money/comme ... UMMER.html

Labour’s dramatic seizure of control over Jingye-owned British Steel was a clear demonstration of inept handling of industrial issues.

Emergency parliamentary sittings are best confined to states of war, not a self-created crisis partly caused by a bonkers drive to net zero.

Ownership of steel is seen as being in the national interest. If that is the case for blast furnaces, what about Heathrow, Thames Water, Royal Mail and much else?

Across the Atlantic, a paranoid President has ordered a probe into pharma imports under the terms of the Trade Expansion Act of 1962. It allows trade barriers on goods regarded as critical to national security.

The public interest is sufficient grounds alone for querying Chinese or any overseas ownership of vital British public assets.

But there are broader reasons why signing away chunks of UK infrastructure to foreigners is wrong. Decisions on steel, affecting production and jobs in Britain, were being taken far away with no thought of the consequences for the UK.

After the transfer of assets from public markets, a shroud of secrecy descends. Successive overseas owners of Thames Water drained it dry of resources, leaving behind waterways overflowing with effluent.

A sub-station fire brought overseas-owned Heathrow to a halt. And Business Secretary Jonathan Reynolds calmly signed away control of International Distribution Services, owner of the Royal Mail, to Czech sphinx Daniel Kretinsky.

A common theme for all these deals is inappropriate financial engineering. All the companies involved were bought, or are being purchased, with heavy leverage.

The Trump trade putsch has cast a dark pall over debt markets. US long bond rates have climbed sharply and the appetite for lending for deals in the $1.4 trillion high yield buy-out market has been hit hard.

It is hard to think that Kretinsky’s offer for Royal Mail will be unaffected. The Mail on Sunday has reported profits at his energy group EPH are under siege, down from £4.5billion in 2023 to £1.4billion this year.

The £3.6billion deal for Royal Mail is being financed by £3billion of high-cost debt. That is in addition to the £2billion already on its books.

The notion that it will be possible for Kretinsky to fund this burden and fulfil undertakings made on jobs and investment in changed trade and debt markets is ludicrous.

Shrewder minds than those making business decisions in Whitehall should recognise this before it is too late.

How long before Kretinsky comes cap in hand to the Starmer government asking for a bail-out?

The last Labour government was deeply averse to public ownership. The current administration, with its shattered business ties and poor judgement, is at risk of being sucked into a new cycle of nationalisation.

[tramssirhc]

Does this 'journalist' really believe that the ownership and control of a business should not be overseas or by a person from another country? The ownership of the publisher he writes for is all over the place including using tax efficient countries. Why no comment on the blackmail of EDF and the French government who are receiving billions to build nuclear power plants?

Obviously it's all about pet subjects and nationalism for Alex Brummer.