London as a financial centre

How London risks losing its global appeal

That claim sounds rather hollow now, thanks to a change in the political and regulatory climate. “London’s position as a financial centre is now threatened,” says Robin Bowie of Dexion Capital, which runs a listed fund-of-hedge-funds group. A special levy on bankers’ bonuses announced earlier this month has come on top of a forthcoming 50% tax rate on high earners, a charge on the worldwide earnings of expats living in Britain (also known as “non-doms”), pension rules that create marginal tax rates of over 100% and some unfriendly words from Adair Turner, the head of Britain’s financial regulator.

A poll of Bloomberg subscribers in October found that Britain had dropped behind Singapore into third place as the city most likely to be the best financial hub two years from now. A survey of executives this month by Eversheds, a law firm, found that Shanghai could overtake London within the next ten years.

To those affected it is the arbitrary nature of the tax changes that has them rattled. “There has always been a belief that Britain gets it,” says Simon Ruddick of Albourne Partners, a hedge-fund consultancy. “By ‘it’ I mean the fact that any tax gathered from the nomadic nom-doms, itinerant hedge-fund managers and overpaid bankers is all fiscal manna from heaven. Now that this truth has been un-learned, there is the real fear and strong expectation that it cannot be relearned.”

So far, Heathrow has not been packed with financiers fleeing the country (if staff at British Airways and Eurostar go on strike, they may find it hard to leave). But it takes time for people to adjust their plans. A survey of financial analysts in September by the CFA Institute found that 20% expected to leave Britain over the next year.

Read more . . .

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Tags: Britain, Hedge fund, Investing, London, London’s position as a financial centre

This entry was posted on Saturday, December 19th, 2009 at 10:18 pm and is filed under Consider This, Economist, Finance, Innovation Needed. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.