Performance of the Economy

What corporate businessmen do about “Europe”

The answer is they tend to treat it rather low down in their companies’ investment priorities. Thus ICI (a “bellweather” of British industry) in the three years preceding its 1992 demerger of Zeneca investedRef 2 as shown in Table 1:

Region Year
  1989 1990 1991
United Kingdom 437 (40) 433 (43) 345 (39)
Continental Western Europe (CWE) 112 (10) 110 (11) 102 (11)
The Americas 260 (24) 198 (19) 159 (18)
Rest of World (inc Asia Pacific) 271 (25) 272 (27) 281 (32)
Totals 1080 (100) 1013 (100) 887 (100)

Table 1: ICI investment £M

(Figures in brackets are percentages of total investment in each year to nearest whole number.)

Little changed in the percentages for Europe in the four years following the demerger, as shown in Table 2, despite the recession and the currency upheavals following our departure from the ERM in the demerger year 1992.

Region 1993 1994 1995 1996
United Kingdom 92 (26) 94 (24) 165 (25) 247 (24)
Continental Western Europe (CWE) 68 (19) 38 (10) 65 (10) 121 (12)
The Americas 78 (22) 117 (30) 155 (24) 147 (14)
Rest of world (inc Asia Pacific) 110 (33) 136 (35) 272 (41) 511 (50)
Totals 448 (100) 385 (100) 657 (100) 1026 (100)

Table 2: ICI investment £M after the demerger of Zeneca

(Figures in brackets are percentages of total investment in each year to nearest whole number.)

What has changed over the period 1989-1996 is the rise of the rest of the world (principally Asia-Pacific) outside the first three regions from 25% to 50% of total ICI investments, while CWE (the European Union plus Switzerland, Norway and Eastern Europe) has remained broadly static at around 10-12%. Since modern process plants are invested for lives of 15-20 years (including extensions) nothing tells you more about a company’s view of the future than the pattern and level of its capital expenditure. Conceivably ICI could be seen as exceptional in its view of the future. Certainly, as we have seen, there is a disjunction between its chairmen in their off-duty hours at the CBI and the decisions of its Board of Directors. Katherine West’s dataRef 3 for the total stock of British overseas investment in 1993 gave the figures in Table 3. Income from these investments is currently running at about £95Bn, not much less than the whole of our exports to the European Union (£110Bn), and about 12% of our annual Gross Domestic Product.

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