Britain's decline as an industrial centre and rise as a "know-how" centre is being painfully exposed as a vicious circle in our European ventures. Where the action is hottest now in Europe - the sell-off of East German assets - London-based merchant banks are putting in an admirable showing, front-running for the bulk of advisory contracts that have not gone to the West Germans.
A spokesperson for Treuhand, the trust body overseeing the privatisation, says about one-third of the 36 approved banks are West German. The British and the London-based American advisers, including UK names like Price Waterhouse, BZW, SG Warburg, Robert Fleming and NM Rothschild dominate the rest of the list. The continental firms are the chief bidders for East German industrial assets. BZW director Adam de Courcy Ling reports that few British firms are coming forward. The reason, he says, is partly because many aggressive UK groups have enough worries at home, partly because most of the assets for sale are in heavy industry - "not at the moment a strength in the UK". Extrapolating this experience it seems the UK vacuum in industry, rather like the hole in the ozone layer, threatens to grow as we move to a single market. Without radical action we might find out sooner than we care to whether we can survive on services alone.