View from City Road: Foreign ownership manacle should end

British Aerospace this week suffered the ignominy of instructing a shareholder to sell simply because the investor is American. The purchase had pushed foreign ownership of BAe 0.02 per cent above the 29.5 per cent limit imposed by the Government. That means the shareholder must sell, or watch BAe do it for him. Like Rolls-Royce, BAe also has to ask everyone who purchases its shares if they are British. So much for a frontier-free Europe.

The restriction should be abolished. BAe and Rolls-Royce are two of Britain's most important defence contractors and it is understandable that the Government should want to stop them falling into unfriendly foreign hands. But it was surely thinking more of Saddam Hussein than of Templetons - one of BAe's three largest shareholders - or Fidelity. The Government also has a golden share in both companies, which should be more than enough to protect them against foreign marauders.

Both companies are lobbying hard against the limit, which might already have been eased but for a dispute between the European Commission, which wants it abolished, and the Government, which wants a maximum of 49 per cent.

This is one case that Brussels should win.