THIS afternoon, I will be setting out the City of London’s vision for 2010 at an event at the London Chamber of Commerce discussing what a Conservative government could mean for the Square Mile. The City’s agenda is in no way contingent on the political orientation of the incoming government – our message will remain the same whoever is in charge.
It is in all of our interests to see the economy returning to growth as fast as possible and the financial services industry, above all others, has the capacity to drive forward our economic recovery and to help service the gaping hole in our public finances. If the City is to fulfil this role, it needs to continue to attract the best firms and biggest business brains from around the world. This is where the UK government comes in.
As a matter of urgency, we must reassert a consistent tax regime that balances global competitiveness with fairness. The 50 per cent rate of income tax and, in particular, the supertax on bonuses, have tarnished our international reputation – we simply cannot expect firms to operate in a business environment defined by such hostility and uncertainty. These measures must be revisited or, in the case of the supertax, revoked as soon as is practically possible.
The need to consider wider global implications also rings true for any changes to our regulatory structure.
We need to create an international consensus and avoid regulating unilaterally – be it at home, or in the EU – in areas that could damage our competitive position.
Legislation coming out of the EU requires particular attention. We cannot allow our regulatory landscape to be defined by an agreement between 27 countries in Europe when most of our global competitors lie outside of this jurisdiction. At present, the UK is too often left on the sidelines in Europe – we need closer and earlier engagement with the EU’s decision-making bodies and we need to upgrade both the numbers and the overall skill levels of the UK’s official representatives in Brussels.
But regulation and taxation are only one side of the story. If our competitors, especially those in emerging markets, have one advantage over the City it is that they are purpose built business environments, packed full with the most up-to-date technology – all they are missing is the talent.
It is vital that any incoming government continues to invest in the large infrastructure projects that will help secure London’s future as a world class financial centre. There is nothing particularly new about the City’s wish-list but the financial crisis, and the political response to the financial crisis, has made action in certain areas imperative. We must work together, business and government, hand in hand to make sure the decisions we make in 2010 are right for the UK, right for London and right for the City.
Stuart Fraser is chairman of the Policy and Resources Committee at the City of London Corporation.