As I train for my 16th London Marathon later this month, I am well aware of how difficult it can be to see the “big picture” in the middle of an intense long-distance race. This is especially true when the 6 May finish line – or 25 April in my case – is still so far away.
It is easy for politicians to forget, or ignore, the contribution that the financial services industry make to the UK economy while competing for votes in day-to-day campaigning.
I am striving to remind them of the City’s value. The industry generated over 12.1 per cent of total tax revenues, amounting to £61.4bn, in the fiscal year ending in 2009. This means the quicker we recover, the more tax we will pay back to the government.
And when I refer to the City, I mean not just the Square Mile but the entire UK-based financial services industry. On my business visit to Edinburgh and Glasgow last week, for example, I held talks with key figures across the second-largest financial services hub in the UK. The industry directly employs 91,000 people across Scotland, with a similar number involved in support services.
These are jobs that are helping to drive the economic recovery on both sides of the border. Politicians would do well to remember this fact.
It is in the interests of all parties to support a strong financial services sector, one that provides the lending businesses and individuals need.
Now this depends to a large extent on our ability to attract the world’s top talent. Tax increases impacting on high earners, such as the 50p income tax rate and the one-off banking bonus supertax, make this harder.
This is why I am encouraging each of Britain’s political parties to create a business environment of predictability, stability and clarity. Confidence in the regulatory and tax environment is crucial to maintaining the competitiveness of the UK, especially as the international business community is becoming increasingly mobile.
It would be counter-productive to impose excessively punitive legislation on the City, or act unilaterally outside of the G20 framework. That is why we need closer and earlier government engagement with the EU’s decision-making bodies. Too often the UK has been sidelined when it comes to key decisions that have affected all 27 member states, which is why the City’s Policy Chairman Stuart Fraser and I have held three meetings with Internal Markets Commissioner Michel Barnier in three weeks.
The City’s success is dependent on industry and government working together after the election. This is a marathon not a sprint, but we must continue to run to avoid falling behind our rivals.
Nick Anstee is Lord Mayor of the City of London.