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MARKET COMMENT
By
Swindon, Wiltshire -- What is it about a £1b profit that grates on pressure groups? Does a pound sign, followed by the numeral 1 and nine consecutive noughts give rational human beings the right to turn into irrational moaners. The "Billion Pound Club" is an exclusive group of companies that have reported full-year profits in excess of £1b. The latest member of this elite sect is Tesco (LSE: TSCO), the UK supermarket giant that reported full year earnings of £1.07b. Other members include Anglo-American oil giant BP (LSE: BP.), high street bank Barclays (LSE: BARC) and drug titan GlaxoSmithKline (LSE: GSK). All these businesses have attracted unwanted attention as a result of their efficient business models. Their paths to achieving this impressive milestone are the result of coherent corporate strategies backed by visionary management, not to mention the great deal of hard work put in by their staff. It beggars belief, then, that pressure groups can dominate news headlines by vilifying these companies and promote unsubstantiated claims of profiteering. But then, that is the right of free speech which is implicit in any free democracy. But what is sauce for the goose is also sauce for the gander. A free democracy implies the right to free enterprise, which in turn leads to a free market economy. None of these enterprises operate in a vacuum. Competition is rife in food retailing, petrol forecourt sales, high street banking and drug development. However, none of these businesses have been helped by governmental interference. Despite this handicap they have still been able to achieve these impressive results. Currently, the regulators are looking into excessive profits made by high street banks. The complaints by farmers over undue pressure placed onto them by supermarkets will also draw the attention of the watchdogs. If we accept that a free market is the best way forward for "Great Britain PLC" then regulators must learn to back off. The duty of government is to create an environment where healthy businesses are allowed to flourish. Pandering to voters in the hope of picking up a few more crosses on the ballot papers may be good politics, but it's definitely bad business.