One can only assume heavy irony in the headline that accompanied a piece in a rival newspaper yesterday on Marconi's debt-for-equity swap – "A triumph for Bonham". The reality is that the refinancing has proved a total disaster, for Derek Bonham, the chairman, and just everyone else who was meant to be batting for shareholders in the interminable negotiations with bankers that have been going on for the last six months.

OK, so Mr Bonham does seem to have salvaged something from the wreckage for existing shareholders. Even half of one per cent of the equity is better than a poke in the eye, and is certainly more than this column thought they'd get. There are also likely to be warrants giving shareholders the right to buy another 5 per cent of the company subject to the achievement of business targets. Again, better than nothing. But is it reasonable for bankers and bondholders to leave shareholders with so little?

The disaster of Marconi is nothing to do with Mr Bonham, who only reluctantly stepped into the chairman's shoes after the enormity of the corporate road crash engineered by his predecessors became apparent. It would also be a touch unfair to criticise him for the way in which the board has handled the situation since. In a corporate collapse of this type, bankers and bondholders hold all the cards. They don't have to give anything to shareholders at all.

Even so, Marconi may have underplayed what limited hand it did have. That there is a salvageable business in there somewhere is evidenced by the fact that bankers have gone the debt for equity route, rather than putting the company into liquidation. From the beginning, the Marconi team angered and alienated bankers by refusing properly to acknowledge their prime position in the pecking order of stakeholders, or indeed that the company was bust at all. Rather than being used to pay down debt, the proceeds of disposals were put into a separate account, apparently with the intention of using it as a bargaining chip against bankers. One business was sold for equity to a supplier, further infuriating some bankers.

A rights issue last Autumn while it was still possible would undoubtedly have enabled shareholders to salvage a great deal more from Marconi than they are now getting. Hindsight is a wonderful thing and Mr Bonham shouldn't be judged too harshly. But triumph this is not.

Bean's encounter

Some years ago, Sir Edward George, Governor of the Bank of England, was asked by a local journalist while on a tour of the North-east whether he thought job losses in the region, because of high interest rates and a strong pound, a price worth paying for tackling inflation in the South-east. What other answer could he give other than yes? He's responsible for setting interest rates and policy has to be defended. Having successfully hijacked the Governor, the write up the next day was predictably angry. Last week, the Bank of England's chief economist, Charlie Bean, went on a similar tour of the same region. As our account below shows, much has changed.

Interest rates are no longer a cause for concern, as indeed they shouldn't be with rates at a 30-year low, and even if they were, Mr Bean had some reassuring comments to make. There's virtually no chance of them rising any time soon. The exchange rate still causes complaint among manufacturers and exporters, but even on this issue, there's been a change of view. Local business leaders now largely accept that there is little which directly connects the level of interest rates with the strength of the pound. Alarmingly for Tony Blair, the focus of criticism has shifted away from the Bank of England and on to him.

The biggest gripe is the planned increase in the rates of National Insurance, which is essentially a direct tax on employment. Following closely behind is excessive levels of Government imposed regulation, as well as overfastiduous implementation of European directives. Rising insurance costs, particularly the rising cost of compulsory employers' liability insurance, is also a cause of growing anger. The Government ignores these warnings at its peril, for although what business leaders complain about doesn't necessarily reflect popular opinion, if business is pushed too far then eventually it affects investment, jobs, prosperity and ultimately votes as well.

The business honeymoon with New Labour ended a long time ago. Mr Blair must realise that. Nor does he need to be told that the marriage is now beginning to turn distinctly sour. He's reminded of it every time he meets a business leader. As any economics textbook will tell you, raising taxes, in this case through the mechanism of national insurance, at a time of economic stagnation is about the worst thing you can do. To judge from Mr Bean's reception, at least the Government got it right in making the Bank of England independent, but even Mr Blair cannot live on past policy triumphs for ever.

EMI floored

Down another 7 per cent yesterday to just 166p, a new 15-year low, it will take a minor miracle to prevent EMI shares slipping out of the FTSE 100 next month. Popular music, it scarcely needs saying, is one of those industries Britain is meant to be good at. How come, then, that its premier music company doesn't even merit a place in the list of our top 100 companies? EMI has lots of problems specific to itself, but its chief difficulty is common to the industry as a whole. It's called internet piracy and solutions seem as far away as ever.

Last year, global music sales fell 5 per cent, and if recent data is any guide, the situation has become worse still. According to figures from the British Phonographic Industry, sales of recorded music in Britain fell 15.4 per cent in the April to June quarter. But the figure that has really spooked the market comes from the Recorded Industry Association, which shows CD sales in the US falling 7 per cent in the first six months of the year. Since there is no evidence of consumers listening to less music, or even a hiatus in exciting new acts, the only plausible explanation is that there are simply a lot more illegal downloads going on.

So far all attempts to curtail the problem, either by legitimising downloads through subscription services or by attempting to make them technically impossible, have largely failed. Once people become used to having something for free, they don't easily give it up again. With increasing computer power and the growing proliferation of broadband, the problem can only get worse. With broadband, downloading music becomes both swifter and its quality more reliable. Broadband also allows illegal downloads to spread to other areas of the media, including video or even subscription TV.

EMI has a history of being naively sanguine about the effect of the internet on its business. Sir Colin Southgate, the former chairman, thought it would never catch on. People would always want their collections of physical CDs, he would often say. EMI's former head of recorded music, Ken Berry, was little better. The new man in the hotseat, Alain Levy, seems at least to understands the perilous nature of the threat. Mr Levy is doing most of the right things in sorting out EMI, but he would more than justify his gold plated remuneration package if he could come up with solutions to the problem of internet piracy. Maybe he's keeping them to himself, but so far he's yet to venture any.

jeremy.warner@independent.co.uk