Europe’s ‘Anglo-Saxon’ phobia is proving deadly

Floundering Europe is poised to press the nuclear button with a vaccine ban on exports, but there is no doubt in their minds who bears the blame.

Despite a litany of procurement failures by the European Commission, MEP Phillippe Lamberts became the latest politician to pour petrol on a raging diplomatic row when he accused AstraZeneca of a “culture of dishonesty, overpromising and underdelivering by massive amounts” and added: “Everything points to a company that cannot be relied on.”

A combination of panic over a third wave and lingering bruises over Brexit may be behind the latest slurs, but critics say Astra – an Anglo-Swedish firm run by a Frenchman – is also bearing the brunt of decades of deep-seated suspicion over Anglo-Saxon capitalism on the Continent.

Even though he withdrew the remarks, Boris Johnson gave succour to that phobia this week with his comments to MPs over the role of “capitalism and greed” in driving the UK’s vaccine success.

That is anathema to the far different models of capitalism practised by the French and Germans, which makes the fury all the more acute. As City grandee Sir Mike Rake – albeit no supporter of Brexit and with decades of experience on the Continent – puts it: “There’s that slight suspicion that we’ve proven that the Anglo-Saxon model of capitalism is the best.”

A history of distrust

The distrust has a long history marked by occasional corporate flashpoints.

As far back as 2000, Vodafone’s £112bn hostile takeover of Germany Mannesmann – ironically triggered by Mannesmann’s overseas move for the UK’s Orange the previous year – caused a storm in a country characterised by its socially-oriented “Rhenish” approach to capitalism. Chairman Christopher Gent was forced to promise that the rights of employees, unions and works councils would be fully recognised; Mannesmann would keep its supervisory board under the “co-determination” model where employees help shape the future of the business.

In the initial aftermath of Brexit, the final effort of the London Stock Exchange to merge with Deutsche Borse was in part scuppered by the prospect of the headquarters moving to the UK. And soon after the pandemic hit, Germany’s economy minister Peter Altmaier was clear that foreign raiders bidding to take advantage of temporarily shattered share prices in companies like Daimler would be blocked. “We will avoid a sellout of German economic and industrial concerns. There cannot be any taboos,” he said.

In France the going is even tougher in a corporate world where foreign takeovers, particularly hostile ones, are usually notable by their absence.

Despite plentiful forays abroad, such as LVMH’s 2019 move for the US’s Tiffany, there were no hostile bids for any French company for three years from 2016. PepsiCo once famously walked away from a bid for yogurt maker Danone in 2005 after prime minister Dominique de Villepin described it as a “crown jewel”. The rebuff of a €16bn bid for Carrefour from Canada’s Couche-Tard as recently as January is typical of the French approach as its economy minister Bruno Le Maire insisted the “food sovereignty” of la patrie was at stake.

Sir Mike adds: “The reason people don’t buy a French company is – number one – they don’t really want to sell them to you. What happens is you get there and the day before you do the deal, they’re sold to someone else, French obviously. Anyone who’s worked in France as I have knows you can’t even get rid of people. It’s a nightmare – there is no flexibility.”

‘Blame the Brits for it’

The financial crisis gave the Europeans another chance to crow as then French PM Nicolas Sarkozy lost no time in attacking the “freewheeling Anglo-Saxon model”.

Angela Knight, a former minister and then chief executive of the British Bankers’ Association, recalls in particular the differing approach taken by the UK and Europe over “mark to market” accounting standards: “They wondered why we did that because it made the crisis worse. They then decided that it was advantageous in Europe, to say that this financial crisis was a US and UK crisis, and nothing to do with them. And so we lived with the blame game: ‘Blame the Brits for it’.”

But during the pandemic, France’s model of national champions and a rigid state-guided industrial strategy has taken a hefty blow from the trailing efforts of Sanofi, the third biggest vaccine maker in the world last year, to deliver a Covid jab which is regarded as a national humiliation.

Reform UK chairman Richard Tice, who worked in Paris early in his business career, is dismissive: “It’s a model of capitalism where basically profit is not the main driver. The main driver is employing people. I was in a taxi in the early 1990s, and the driver said to me, ‘Companies exist to employ people, not to make profits’. That’s the mindset. It is cultural, philosophical and deeply misguided.”

The European attacks on Astra are fuelled by nothing more than sour grapes, he adds: “This would not be happening if it was the Pfizer-BioNTech vaccine. This is happening because it’s a British vaccine, and it’s a British success story of implementation, pure and simple. This is pure Brexit jealousy, nothing more.”

Knight agrees that “there would not be anything like the same sort of irresponsible political reaction” – such as Emmanuel Macron, the French president, publicly questioning the efficacy of the Oxford vaccine – if Astra had been a Franco-Swedish company, or based in an EU nation.

The UK has admittedly just toughened its own stance on foreign takeovers through the National Security and Investment Bill, designed to protect sensitive industries against an encroaching China.

But Lord Lamont, a former Chancellor, warns the vaccine row could push Europe and the UK even further apart. “I think this crisis over AstraZeneca has crystallised a fear I have which is, as much as I wanted to leave the EU, when we left the EU may give in to its worst instincts and become ultra protectionist.”

Gerard Lyons, Mr Johnson’s former economic adviser, adds that the confidence of investors in European capitalism could ultimately be shaken if vaccine contracts are breached.

He warns: “How governments behave in times like this sets a precedent for the future in terms of how longer term investors and other countries may see them. So I think it’s important to do the right thing… I think they’re in a hole and digging deeper.”