ALEX BRUMMER: Neglect of UK innovation happening before our eyes

Daily Mail​

11-07-2025

Another month and a second successive drop in Britain's economic output. It is starting to look as if the 0.7 per cent rise in the first quarter, which Keir Starmer crowed about in the Commons earlier this week, was an aberration.
Everyone craves growth and the UK has no shortage of dynamism. The UK has world-class research universities, a thriving tech and artificial intelligence (AI) sector, great pharma and world-leading creative industries.
The worry is that high taxes and a government caught in a doom loop is incapable of ending the drift.
Barely a day passes without intellectual property nurtured and supported in Britain passing into overseas hands. There was hardly a murmur of dissent this week when London-based biotech pioneer Verona Pharma was sold for a whopping £7.4billion to American giant Merck.
Verona operates in a sector in which the UK excels, and its roots can be traced directly to research on pulmonary diseases at King's College, London. Once listed on the City's AIM market, it decanted to the Nasdaq in 2020 as it searched for deeper-pocketed and less risk-averse investment institutions.
Britain's banks and insurers claim that they are prepared to use the power of UK financial services to back British business. Deregulation of the London stock exchange listing rules and freeing up pension fund money should help. But the loss of wealth and advanced skills is happening before our eyes.
Lost property
Indeed, the fate of Aim-listed Warehouse REIT may not appear a matter of high national importance.
Yet the decision of the group's board, headed by experienced M&A adviser Neil Kirton, to take private equity cash from Blackstone rather than a deal with UK competitor Tritax Big Box REIT illustrates how short-sighted British-quoted companies have become.
It is another significant setback for UK plc ahead of Chancellor Rachel Reeves' Mansion House speech, where reviving the cult of equity investment is on the agenda.
Blackstone, for all its scale and swagger, cannot be considered a good owner when it comes to British real estate. Its history in the UK will forever be associated with its ownership of the Southern Cross care homes two decades ago when it bought the company, sold the properties for a quick profit, leaving the care homes group, its employees, and patients high and dry. The industry would claim now that such incidents are a blip. But the High Street is littered with the detritus of private equity deals that went wrong.
Blackstone is smart and in recent times has better understood big changes taking place in the real estate market. Traditional shopping struggles but online has prospered. Warehouse space has become valuable and could become even more so as demand for data centres to power AI grows.
The private equity outfit has been developing a European-wide network of warehouses serving Amazon and other tech giants. A key to private equity returns is a financing structure based on leverage. But to service the debt often means renegotiating leases at higher prices, which eventually are passed through to end users. A more forward-looking Warehouse board would have followed the example of NHS property outfit Assura that recognised in the end that a merger with rival Primary Health Properties made more industrial sense.
Warehouse shareholders should ignore the board and reject the Blackstone shilling.