CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Govt defends Royal Mail share sale

Article By: ,  Financial Analyst
April 2, 2014 11:45 AM

The UK government has defended its decision to offer shares in Royal Mail at a low price when the postal service was privatised by the state towards the end of last year.

Business secretary Vince Cable was responding to a new report from the National Audit Office (NAO) released yesterday (April 1st), which accused the government of undervaluing the company, costing the taxpayer a lot of money.

But Mr Cable stated that it was a deliberate ploy by the government to set the share price of Royal Mail at a low level, as this was the best way to reduce the risk of it failing.

Mr Cable insisted the government was "right to take a cautious approach", but his opposite number, the shadow business secretary Chuka Umunna said it was "a first-class disaster".

"The last thing I intend to do is apologise. What I do intend to do is to refer to what the report actually said as opposed to the spinning and the froth that is being generated around me," said the Liberal Democrat MP.

"A more aggressive approach to pricing would have introduced significantly greater risk and the advice that we received in this respect was unambiguous."

Calls for resignation

However, Billy Hayes, general secretary of the Communication Workers Union, called for Mr Cable to resign over the Royal Mail share sale, describing it as a "botched, panic sale" and the business secretary "should consider his position".

Mr Cable pointed out that the share sale raised £2 billion for the taxpayer, as well as a further £1.5 billion from the 30 per cent stake in Royal Mail retained by the state.

Amyas Morse, head of the NAO, noted the government was successful in meeting its goal of selling Royal Mail and it was also successful in getting the company listed on the FTSE 100. He said: "Its approach, however, was marked by deep caution, the price of which was borne by the taxpayer."

By 10:26 BST today, shares in Royal Mail were down by 0.49 per cent on the start of the day.

Find up to date information on the FTSE 100 and spread betting strategies at City Index

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024