Exodus: 25% of financial services industry considers leaving UK
Taxes and regulation is driving the financial services industry in London to seriously consider undergoing an exodus to low-tax economies like Switzerland, according to a survey.
The poll, commissioned by YouGov for the right-of-centre thinktank Policy Exchange, suggests 54% of the London-based finance companies questioned are planning to move within just two years, while 24% said they would move within 12 months.
The thinktank warns the financial services industry – which, they say contributed £61.4 billion in the year 2008/9 – is “in danger of fading away”.
According to the poll, 64% of those questioned cited the overall tax burden as the critical factor pushing them to consider moving.
The report’s author Ted Sumpster argued: “What the City needs is clear and stable taxes and regulations that will preserve its status as a leading international financial centre.
In an atmosphere of public austerity, the government is wary to appear to be imposing tougher regulation on banks and financial services.
A one-off £2 billion bank levy has been introduced, with minsters threatening further action in the form of a ‘bonus tax’ and greater regulation if remuneration continues at ‘unacceptable levels’.
But Mr Sumpster warned: “There’s nothing pre-ordained about London’s reputation as one of the best places in the world to do business.
“Financial services is a highly mobile, globalised industry where the key people and firms are able to move to wherever they can best achieve their goals.
“Britain is in danger of driving away talent. In other words, we could end up killing the goose that lays the golden egg.”
The sentiments were echoed by the Stonehage Group, which advises ‘Ultra High Net Worth’ individuals on their assets.
Campaigners have called for more drastic measures on banks ranging from a Tobin tax on all financial transactions to a complete rebalancing of the UK economy away from the industry.
Andrew Rodger, Stonehage executive director, said: “It is clear that fears over increased tax complexity and further regulation are leading many in Britain’s financial services industry to consider leaving the UK, which could damage the UK’s competitive position as a financial centre irreparably.
“Delivery of a simpler and more stable tax system would allay fears and prevent what is a trickle turning in to a flood.”
The government has commissioned an independent report due to be delivered next year on the future structure of banking, with some minister pushing for a complete separation of banks’ retail and investment functions.
The lingering issues surrounding the financial crisis continue to stir the public mood.
In an extract from his new book serialised in the Guardian, Gordon Brown spoke of his “furious” reaction to the “recklessness” on financial institutions in failing to hold sufficient capital.
Mr Brown added that the government was “misled” by the Royal Bank of Scotland before the crash which necessitated its virtual nationalisation.
