Boris: exodus from City to knock public finances

MAYOR Boris Johnson yesterday called on the Treasury Select Committee to launch an “urgent” investigation into the government’s new tax on bank bonuses, which he said would seriously endanger the City’s position as a competitive global financial centre.

The Mayor’s advisers predict up to 9,000 bankers could leave the UK for more favourable jurisdictions due to the so-called “supertax”, the new 50 per cent income tax band, rules on non-doms and a raft of damaging EU financial services regulation.

“These ‘salami-slicing’, shortsighted proposals could potentially and permanently damage the competitiveness of London as a financial centre by driving away the city’s unique cluster of highly skilled people, ideas and expertise,” Johnson said.

City Hall said the exodus could potentially cost the economy over £1.2bn in lost tax revenues annually.

Johnson’s call to arms came as it emerged that the Financial Services Authority plans to force all bankers earning over £1m to defer their bonuses under its new remuneration code. Under the FSA’s original plans, only those exerting a “significant influence” over a bank would be affected, with those earning over £500,000 having to defer 60 per cent of their bonus over three years.
But the regulator has now widened its net to ensure all bankers earning over £1m will be subject to the 60 per cent bonus deferral.

JP Morgan will on Friday kick off the annual results round at the world’s biggest banks, which are this year expected to pay out around £40bn in compensation. The bank is expected to hand out a record $29bn (£18.1bn) in salary and bonuses, thanks to a resurgence in activity at its investment banking division.