LONDON (Reuters) – The British government is likely to put on hold plans to sell part of Royal Mail because it has run out of parliamentary time and market conditions are not right, Business Secretary Peter Mandelson said on Monday.
Speaking to the Financial Times, Mandelson pointed to the depressed state of financial markets as a reason not to sell a stake in the state-run postal services operator now.
Brown’s government has proposed selling part of Royal Mail under a package of measures aimed at making the company more efficient and closing a pension fund deficit that some estimate could be as much as 10 billion pounds.
Legislation to allow a sale of up to 30 percent of the operator has run into opposition from members of Brown’s Labor Party, creating a problem for him just after he put down an attempted revolt against his leadership of the party.
Many left wingers in the party oppose part-privatization of what is a key public service.
Private equity group CVC Partners has offered just under 2 billion pounds for the Royal Mail stake, but the government is thought to see that as not high enough.
Looking forward to the next general election, which must be called by mid 2010, Mandelson said there were encouraging signs of recovery in the British economy which would mean Labor could position itself to maintain spending on key public services.
“The worst is behind us,” he said. “The fall in demand, market activity and reduction in bank lending is now bottoming out. These are encouraging signs.”
(Reporting by Kate Kelland. Editing by John Stonestreet)