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British industrial renaissance will have to wait

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The government pumps money into the housing market and shares in real estate agents soar on the stock market. In Britain on Wednesday, it happened the other way round: shares in Countrywide, a realtor, danced a little Spring jig on their debut in a £750-million ($1.163-billion) IPO, a couple of hours before the Chancellor of the Exchequer, George Osborne, revealed his plans for the U.K.'s first government-backed mortgage guarantee scheme.

No one is suggesting the Chancellor tipped off the market about his plans to help homeowners but there is something deja-vu about aspects of the U.K.'s new budget and the recent surge in stocks and shares. Mr. Osborne's proposals included help for homebuyers and the scrapping of planned increases in duties on alcohol and gasoline. There were also some "growth-oriented" measures, such as lower corporation tax and a cut in employment taxes for small businesses. But at the end of his hour-long oration you could ask yourself what Mr. Osborne believes will generate Britain's economic recovery, and the answer would be: a housing boom and more spending in shops.

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All that talk about a manufacturing renaissance, help for exporters and a revival of science and industry has evaporated. Previously, we were told Britain must begin to shift its economy away from the London stew of banking, services, shopping and tourism. What is needed, said the experts, was seed capital for new technology and masses of public infrastructure investment. Instead, what we are getting is same-old, same-old – more jack in the pocket for booze and more opportunities for chaps in smart suits to sell overpriced homes to gullible foreigners.

No surprise, then, to learn today that another real estate agency, Foxtons, is planning to cash in on the stock market uplift by selling some equity. Foxton's notoriously pushy agents and their branded Mini Cooper runabouts became a by-word for the 1990s London housing boom. The firm even achieved cultural fame when the National Theatre updated Gogol's satirical masterpiece, the Government Inspector, reimagining the play's rascally anti-hero as a former Foxtons estate agent. With perfect timing, Foxton's founder, Jon Hunt, sold the business in 2007 for £360-million and it now seems that the buyer, BC Partners, a private equity firm, sees the opportunity to regain some value lost in the crash.

Perhaps the Chancellor is right. For the time being, Britain's best hope of economic growth may be a bit more of the old razzle-dazzle. You can no more refashion a national economy overnight than change the course of a supertanker in a minute. We will have to wait for the industrial renaissance. In the interim, it's beer, skittles and original Victorian features.

Carl Mortished is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights.

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About the Author

Carl Mortished is a Canadian financial journalist and freelance consultant based in the U.K. With a career spanning investment banking, journalism and consulting for global companies, he was for many years a financial writer and columnist for The Times of London. More


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