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UK government considers privatisation of Royal Mail

The UK government is seriously considering a return to the 1980s and a privatisation of Royal Mail along the lines of the British Gas share offer. This will come as a bitter blow to the unions who are seriously concerned about potentially enormous job cuts in the short to medium term although it is rumoured that Royal Mail staff could be offered up to 20% of the business if it was floated.

While a potential sell-off of the Royal Mail would be controversial there's no getting away from the fact that the company has a pension deficit which currently exceeds £10 billion and there is greater need for cost-cutting than ever before. The previous Labour government had begun the odious task of cutting the cost base at Royal Mail although union intervention and the election earlier this year seemed to slow down progress. However, the coalition parties have now picked up the baton and are apparently willing to push through major changes in the short to medium term.

Like so many previously privatised companies there is no doubt that there will be significant interest for Royal Mail which has a number of profitable operations. How the government and the UK public would feel if the company fell into "foreign hands" is another matter for debate.

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