views

Be wary of London becoming uncompetitive

As a representative of the UK financial and professional services industries, overseas visits are a key part of my job, not only to encourage foreign firms to invest in UK plc but also to help our global partners create environments in which UK-based firms are willing and able to invest and prosper.

Last week I was in South Africa, a dynamic and challenging business environment that is also one of the UK’s key trading partners.

The close relationship between our two countries received a major boost last month when President Zuma brought a business delegation of 12 ministers and 216 firms to the Guildhall and Drapers’ Hall.

My return visit reinforced this momentum, providing further opportunities to discuss important issues such as infrastructure, public private partnerships, skills and legal access with President Zuma and others.

A lot of my time in South Africa was therefore spent praising the virtues of open markets and highlighting the advantages – increased investment, employment and skill levels, not to mention an enhanced global reputation - of working alongside, and having increased access to, top international firms and their top employees.

Meanwhile, as of April, London will become one of the most expensive financial centres in the world for high earners to live and work.

I fully understand that, with a general election just around the corner, no politician can afford to be perceived as favouring the financial services industry at the moment.

There were also a number of welcome announcements in this year’s Budget such as the guarantee that, if a tax on banks is imposed, it will only proceed as part of an international consensus. However, we must bear in mind that public comments designed to appeal to the UK electorate may play less well with the increasingly mobile international business community.

As the Chancellor acknowledged, the financial services industry has a vital role to play in driving the UK economy towards recovery and one of the industry’s major strengths has always been its long-standing history of welcoming the world’s top talent, and hence the highest earners, with open arms.

Unfortunately, we are now in a position where high earners, including financial sector workers, are being targeted through taxes such as the higher rate of income tax and the increase in stamp duty on homes costing more than £1m.

This has led to fears that London is losing ground to other financial centres as the centre of choice for the biggest firms and their top performing employees.

Regardless of who forms our next government, the City’s message will remain the same – we need a stable and predictable tax regime that ensures we remain competitive.

Nick Anstee is Lord Mayor of the City of London