Overseas people wait for clarity over Brexit

Foreign investors can be forgiven for worrying that, post-Brexit, Britain's attitude to outside investment might change

Major foreign investors are awaiting some clarity about whether Britain will maintain its traditional open-door policy to international corporations wishing to buy into the its economy following this year's Brexit vote.

Since Theresa May became prime minister in the wake of the June referendum decision to leave the European Union, her insistence that "Brexit means Brexit" has proved an unhelpful guide to both domestic and foreign-owned businesses planning for a future outside the EU.

Hints of a tighter regime came as soon as May came to office in July and put a brake on a nuclear deal involving major Chinese investment. In the end, she gave the go-ahead for the $21.9 billion Hinkley Point nuclear power station development in which China National Nuclear Corporation is a main investor.

May's caution was put down to her wanting assurances about the potential national security implications of placing such a vital infrastructure project in the hands of foreign companies, in this case China and France.

But she has since signaled that the government might adopt a more interventionist stance on foreign investment in less contentious sectors. The emergence of a more protectionist rhetoric from the prime minister has alarmed not only traditional business backers but also free-marketers in her own government.

May's challenge is how to interpret the sentiment of the majority of voters who opted for Brexit in the June 23 referendum, which offered a simple "yes" or "no" choice on continued membership of the EU.

The referendum result has been variously seen as primarily a rejection of large-scale immigration from Europe and elsewhere; as opposition to globalization, including the takeover of British industry by foreign firms; as a reassertion of sovereignty in the face of further political integration within the EU. Or all of the above.

For some voters, the Brexit campaign slogan of "Take back control" might well have been taken as a pledge to take back control of those parts of the economy now in the hands of foreign companies. But that conflicts with the slogan of free market Brexiters that Britain would remain "Open for business" after EU withdrawal.

Controversial foreign takeovers do occasionally make the headlines, as when the quintessentially British chocolate-maker Cadbury's was sold to a US company in 2010. The outcry over the sale was as much a sentimental protest as an expression of concern at the loss of British jobs.

May might have judged that she was tapping into a popular resistance to foreign takeovers when she indicated she might change the law to allow the government to intervene more forcefully to assess their merits. That would involve establishing a system for the government to routinely vet big foreign deals.

However, she faced immediate pushback, not only from the business sector but also within her own cabinet. Philip Hammond, the chancellor (finance minister) reportedly told her in cabinet that Britain could not go down what he called "the Danone route". He was referring to action by the French government in 2005 to block a foreign takeover of food producer Danone, regarded in France as something of a national treasure, just as Cadbury's was in Britain.

Successive free-wheeling British governments have until now tended to ridicule the interventionist tendencies of some of the UK's European neighbors. But foreign investors can be forgiven for worrying that, post-Brexit, Britain's attitude to outside investment might be about to change.

May's nudge toward protectionism might prove popular among voters in the short term, but in the light of the challenges confronting the UK economy after the referendum and of resistance from her free market colleagues, Britain is unlikely to turn its back on foreign investors just yet.

The author is a veteran foreign affairs commentator. Contact the author on harvey.morris@gmail.com. The views expressed do not necessarily reflect those of China Daily.