The news that HSBC is to consider moving its head office is a warning shot to voters and policy-makers that London’s pre-eminent position as perhaps the leading global financial centre simply cannot be taken for granted.
Yes, it has “natural” advantages, being in a time zone between the US and Asia and with English being the language of global commerce, and it is a great city to live and work in. But it is too easy to forget that it wasn’t always this way, and that much of its success originates from reforms and policies implemented in the mid-eighties.
The twin threats of ever greater EU meddling with the financial sector and how it pays its staff and the seemingly voracious appetite for concocting new wealth taxes by Labour pose a real threat. Anyone who works in the City will understand the international character of the firms and people working here. Both can quite readily move elsewhere if they are not wanted.
Nick Hungerford, chief executive and founder of Nutmeg, says No.
London will remain the world’s financial centre. A stable legal system and the perfect time zone make it a first choice for finance companies. Corporation tax is relatively low, and let’s not confuse the banks with the rest of the industry. We have a thriving community of investment and asset managers and are leading the world in fintech innovation.
HSBC is sending out a message that increasing the punishment for banks will force a review, and that’s exactly what it should do. As a consequence, the politicians and bankers will come together to determine what is the optimal levy that keeps banks here but which also repays the Exchequer for past sins.
If anything, this shows that London’s financial sector is cleaning up its act – there’s nowhere to hide for those unwilling to play by the rules. Financial services firms need an exceptional ecosystem to operate in if they wish to be effective. The UK is the most exceptional of all and I have no doubt it will continue to prosper.