UFO Info Week-End

If Messers Vallance and Bonfield delayed too long a rival group would swoop in The reasoning is

If Messers Vallance and Bonfield delayed too long, a rival group would swoop in The reasoning is basically defensive. Why was it necessary to buy MCI outright, many wondered, when the existing Concert alliance in the international business market seemed to be outperforming similar offerings from Sprint and AT&T? Why, they also asked, was it necessary to pay over the odds to take over MCI, the biggest deal in UK corporate history?Though BT can convincingly talk of the pounds 1.5bn worth of synergies and savings from the merger, the real truth is less palatable to all those institutional bean counters who have become used to BT’s guaranteed dividends. But despite the best efforts of AT&T to disrupt the process, BT would hardly have set out on the merger path if it wasn’t given some kind of private assurance of success, and though clearance may be taking longer than anticipated, it must surely come.Assured of success as it no doubt is, BT has none the less found the merger a surprisingly tough proposition to sell to the City. It is unlikely that more than a few hundred of the 2.3 million BT small investors will turn up this morning, given that a yes vote is a certainty, but the occasion is no less momentous for the predictability of the outcome.With today’s egm over, there is only one significant hurdle left – US regulators.

Labour has already promised a financial audit once it gets into power and is unlikely to defer from this time- honoured habit. Unfortunately markets have an unnerving habit of believing the politicians when they say that in truth the economy is in a dreadful state.BT should clear its final hurdleWembley, the scene of many a sporting triumph, is a fitting location for British Telecom’s historic shareholders’ meeting today to approve its merger with MCI. This is not because markets necessarily have anything to fear from Labour, but because Labour will almost certainly try and talk down the economy once it gets into office. There’s also another reason why sterling will probably begin to fall back again at some stage in the next six months; the strong possibility of a Labour government. More likely the strong pound is due to temporary factors and will eventually end up hitting exports and slowing down the economy.

Surveys suggest export orders are already weaker, even though domestic demand is still offsetting the impact on output.If this is the case, the pound’s strength will probably be a temporary phenomenon – a simple reflection of the likelihood of higher interest rates thanks to the stage of the business cycle the UK, like the US, has reached. However, the evidence for this is far from conclusive and certainly not strong enough for the financial markets to have marked up sterling by 14 per cent in six months. Those people who are propounding both points of view need lessons in logic, never mind economics.
Of the two, the latter case seems the more plausible. It may well be, as John Major and Kenneth Clarke keep insisting, that Britain is not just booming but on a fundamentally better economic path.

Therefore there is no urgent need to increase interest rates because lower exports will slow growth. The inconsistency is in arguing that the causality can go in both directions simultaneously. Either the fundamental strength of the economy can and should lead to a sustainably higher exchange rate, or a higher exchange rate can and will damage the economy’s strength, but not both at the same time. One is that the fundamental vigour of the British economy means the pound is on the up and up, and will climb even further once the uncertainty about the election is out of the way and we have a Labour chancellor starting to raise interest rates. Group sales were flat at pounds 3bn.Mr Melmoth said his priority was mainstream retailing and he would target the CWS’s 700 food and non-food stores to improve their performance.Lanica Trust yesterday restricted itself to a brief comment on the CWS figures. “Overall it makes a diabolical return on a huge amount of turnover.”. However, it is clear that some superstores are struggling and it is possible some will be sold.Profits at the specialist retail businesses, which include the funeral directors and travel agency business, are 12 per cent up at pounds 12.8m.