Deutsche Bank said the golden rule was met on only one of three possible yardsticks, all of which the Chancellor had used in the past.Barclays Capital agreed with a £1.1bn shortfall. However, the IFS said this compared with the £124bn it forecast in 2001 and an average two-year forecasting error of £19bn.It repeated its complaint that by adding together the cash surpluses and deficits – rather than working it out as a percentage of GDP – Mr Brown breaks the rule by £1.1bn.Whereas in the past this had been an arcane argument between the Treasury and the think-tanks, the big investment banks are joining in. PricewaterhouseCoopers, the accountancy firm, said the “black hole” was £10bn.At the heart of the debate is the golden rule, which dictates the Government must borrow only to invest over an economic cycle, meaning borrowing to pay for other spending must be covered by surpluses in other years The Chancellor said he would pass the test by £11bn. Doubts were growing yesterday over the Government’s pledge to cut £20bn a year of spending to fund investment in front-line services – a central plank of Wednesday’s Budget. There may be more opportunistic flotations soon, but it is difficult to see returns justifying the company’s market value for many, many years.The only certain thing is that a public company is not the most tax efficient way to be investing in start up ventures Avoid..

Most of its investments are in new life sciences ventures, but there are others in hi-tech, sexy areas such as nanotechnology. Yet it is impossible to get a grip on what IP2IPO might one day be worth to its shareholders. This month’s flotation of one early-stage investee company, Offshore Hydrocarbon Mapping, raised £1m, which will cover IP2IPO’s central expenses for the coming year. Buy.IP2IPO could spell more bubble and troubleAre we in the middle of another technology bubble? For bears making the case that we are, the valuation of IP2IPO, an intellectual property “incubator” spun out of Evolution Beeson Gregory, is Exhibit A.IP2IPO is a veritable sweet shop of embryonic companies, more than a dozen in total, and it has first dibs on ideas from Oxford University’s chemistry department, King’s College London and the universities of York and Southampton. Jeroen van der Veer, the new chairman, cuts a deeply unimpressive figure with little apparent notion of the profound challenges that lie ahead. Microsoft will be fined hundreds of millions of euros by the European Commission and could be forced to sell versions of its Windows operating system with rival media-playing programs included, after talks between the two sides broke down yesterday.
Despite the intervention of Microsoft’s chief executive, Steve Ballmer, who flew to Europe for talks with the EU Competition Commissioner, Mario Monti, the sides said they could not agree on “commitments for future conduct”.Microsoft said it would appeal against the decision – a process that could take years.At the same time, the EU is also expected to tell Microsoft to reveal details about how its larger server computers communicate with its desktop machines.

Yesterday’s results, though, showed that things had improved rather than, as expected, continued to decline in the second half. Net asset value per share rose 1.5 per cent between June and December and Mr Burns said a pick-up in the West End was “close at hand”.Derwent attracted the interest of Winten, a Gibraltar-based investor, earlier this year but it was sent packing after offering 800p a share, compared with last night’s 795p. Given the short-term recovery potential, the medium-term possibility of conversion to a tax-efficient investment trust, and the long-term strength of the business model, Derwent is worth considerably more. It buys up down-at-heel properties where the tenants are on unattractive short leases, gives the place a revamp and gets in new long-term tenants, then sells on the property at a profit. It is a more attractive business model than that of many bigger property groups, who take a sedentary approach to development and prefer simply to harvest rents.Needless to say, 2003 was not an easy year. With tenants proving harder to come by, especially around the City, rental income declined and the value of the company’s assets tumbled 6.3 per cent. There is also work to do to turn round a UK distributor of industrial tools, where customer service standards have become so poor that clients are deserting.The share price looks a little stretched on 22 times this year’s earnings, but the 4 per cent dividend yield gives support.

Hold.Derwent Valley looks like hot propertyNice Company, Derwent Valley. The property group has long since sold the Yorkshire railway that gave it its name, and John Burns, who became managing director in 1987, has built up a distinctive business with assets concentrated in the West End of London and what he calls “the City borders” on the edge of the Square Mile.Derwent is an “investor and refurbisher”. A warehouse has been opened in China and the hope is that Premier Farnell can work more closely with its multinational clients to ensure it gets its product offering right. Profits before tax fell 9 per cent to £54.6m in 2003.As well as the malaise in business activity and investment, the company also spent more than usual in 2003 on improving its computer systems and rebranding some of its divisions – actions which have already started paying off.For this year, the aim is to bulk up the business in Asia, where it is currently too weak. We were too cautious on the global outlook to recommend the company’s shares this time last year, and our readers have missed out on a 40 per cent rise in the share price since then.The results Premier Farnell reported yesterday ought to represent the nadir of its fortunes.