NEW YORK SHARES

Taken together, these two factors deter employers from recruiting new staff and hinder businesses from developing the higher productivity on which sustainable growth depends. And far from making things better, the past decade has seen a steady increase in the level and complexity of employment law. Beecroft’s report would have reduced the amount of regulation in a comprehensive and principled way – and, by doing so, would have introduced new certainty and confidence.

That confidence matters, because businesses are far too short of it at present. British businesses collectively hold about £750 billion in cash. To reach its fiscal targets, the Government needs a steep rise in investment – the rate at which they spend that money. Speaking last week, David Cameron said that he leads “a Government resolutely committed to being on the side of enterprise, entrepreneurs, businesses large and small, wealth creation of all types and descriptions”. To many, that is clearly not the case. A full-blooded Beecroft Review would reassure such people, just as a pale imitation would reinforce their concerns.

Taking a step back, today’s news adds to a sense of unease about what the Coalition is actually trying to achieve. This is a Government that claims to have deregulation at its heart, fired by a Tory belief in free markets and a Lib Dem distrust of central direction. It has a policy to stop the growth in regulation (so-called “One In, One Out”) and to reduce the stock of it (the “Red Tape Challenge”). In general, it is supposed to have rejected an old approach based on more debt and higher state spending, and to be looking for real growth via higher productivity.

Recently, however, we have seen a weakening in the Government’s position. Last autumn, the Chancellor pushed his deficit reduction target from the end of this Parliament into the middle of the next. Last week, the Prime Minister hinted at new borrowing to finance infrastructure – exactly the way that Gordon Brown justified his record spending increases. At the same time, the retreat over the NHS has cast a long shadow over the Coalition’s commitment to public-service reform, and its changes to the planning system are taking much longer than expected.

In recent days, the Prime Minister has urged his European counterparts to take action by saying that the eurozone is “at a crossroads”. He should hold his own Government to account in the same terms. Given the challenges facing the country, it is surprising that he needed an independent report to propose changes to employment law at all. Now that he has it, it will be remarkable if he does not implement it – and then keep up the pressure.

Mr Cameron is right that the country’s basic economic problems are due to poor productivity rather than lack of government action. He will know, however, that the contrary view is growing in popularity (and, indeed, capable of winning elections in other countries). The more his policies focus rigorously and consistently on improving the efficiency of the economy, the more successful they will be.

Andrew Haldenby is director of the independent think tank Reform

Asked about the windfall he will receive, American-born Mr Diamond explained that he bought shares in BGI at the same time as many other “senior people”. “The way the business has performed over the last six years, driving from $100m a year of profit before tax in 2003 to as high as $1.5bn in 2007 means the returns to employees who bought shares were good. I’ll leave it at that,” said Mr Diamond.

Both he and Mr Varley will join the BlackRock board should the deal - which values BGI at 11.8 times 2008 earnings before interest, tax, depreciation and amortisation (EBITDA) - be approved by shareholders. The sale proceeds would lead to a net gain for Barclays of $8.8bn, raising the bank’s Tier One capital ratio to 8.3pc from 6.7pc.

There remains a slim chance that the deal could be scuppered should a consortium led by CVC Capital Partners – which had originally offered $4.4bn to buy the iShares part of BGI in April - chooses to propose a higher offer for the entire BGI business.

CVC has until June 18 to propose such an offer, with Mr Diamond on Thursday night confirming that it was “pretty clear” that Barclays’ board would accept an offer only for the whole of BGI and not just iShares, which specialises in exchange traded funds.

However, if CVC does not trump BlackRock’s offer, the proposed combination will be recommended by the Barclays board and put to a shareholder vote, which, if successful, will lead to the creation of the renamed BlackRock Global Investors with $2.8 trillion of assets under management.

Mr Diamond went on to admit that the two companies have been talking on-and-off for the last 6 to 7 years, but that although “it wasn’t the right time then, clearly it’s the right time now.”

BlackRock is funding part of the deal through a $2.8bn institutional share offering. Although Mr Fink would not disclose the identity of any of the investors involved, the Sunday Telegraph revealed last week that the Qatar Investment Authority, the Abu Dhabi Investment Authority and the Kuwait Investment Authority were all interested in backing BlackRock.

Shares in Barclays, which closed up 16p at 304.5p on Thursday on expectation of the deal’s announcement, are set to rise further when the market opens for business this morning.