Outlook: Aid for inward investment should be banned

The Japanese Trojan horse was trundled across the Channel yesterday into the Pas de Calais to be greeted by half the Jospin Cabinet bearing gifts - in this case a cheque for Fr400m to secure a Toyota car plant and 2,000 jobs for the depressed town of Valenciennes.

How things have moved on. It is not so long ago that the Peugeot chairman, Jacques Calvert, described Britain as a "Japanese aircraft carrier floating off the North-west coast of Europe" - a snide Gallic reference to its success in attracting all three of Japan's big car makers. Now they have Starlets in their eyes. It is a measure of how far attitudes and economic circumstances have changed that the French should have welcomed this particular landing party with such open arms.

The inscrutable executives from Toyota City have checked out the golf courses, the private medical care, the wine cellars and the local fish markets and have given Valenciennes a clean bill of health. By a stroke of luck they have also discovered that southern Europe and not Derbyshire is the place where folks buy small cars in the biggest numbers, so they have another excuse for selecting France.

This year Toyota will sell a paltry 45,000 Starlets in Europe against a total market for this class of car variously estimated at between four million and five million per annum. To get a serious slice of the action, the Japanese needed to get closer to their customers, to use the current management parlance.

In the process, they appear to have forgotten, however, that the French have some of the highest social employment costs of any country in Europe, along with the sort of redundancy and pension entitlements that would make the average Japanese finance director want to commit hari kari.

Margaret Beckett, who could not find a bribe big enough to keep Toyota here, was right for once yesterday when she insisted that Britain's decision to remain outside the single currency was not a decisive factor. By the time the Toyota plant is up and running at full tilt in 2002 the single currency will either be an aberration best forgotten or a rip roaring success with Britain about to join. Either way the playing field will be levelled. Britain will either be joining a successful euro or an unsuccessful euro will be in the process of falling apart.

In the interests of a single and transparent market, the legislators might also like to level another bit of the pitch by outlawing state aid for all forms of inward investment - a distortion of trade if ever there was one. Either a region is worth investing in on its merits, or it is not.