Why not tax the bejesus out of the City and tighten regulation? Yes, the bankers will moan — but it's not as if they will go abroad. The tax rate may be low in Zug, but do our pinstriped friends want to actually live there? The City's elite have their kids in British schools, the time zone is right for business and the global phenomenon of Planet London has attractions that outweigh marginal tax rates. So let bankers moan: they'll stay. This is, more or less, the argument that you hear from MPs on all benches as they take a carving knife to the golden goose that is the City of London. But a report from the CEBR today shows that the exodus has already started. Here are their projections of City jobs:


It was never a question of, say, Barclays upping sticks and moving to Hong Kong. It's a question of where these banks choose to expand, and where they choose to make savings. The CEBR report shows that New York has already pulled ahead of London  in the number of jobs in 'City type financial institutions' but many of Wall St jobs are about domestic banking. London still wears the crown of global finance. But the CEBR forecasts that the rot has set in and that Hong Kong will overtake London in 2015 (it had less than half London's number in 2007) while Singapore is 'fast catching up'.

The report says:

  • 'Many of the Asian markets have gained critical mass, enabling them to take on functions and services previously carried out only in the West.
  • Onerous regulation and taxation in the UK have also contributed.
  • New York has declined by less than London because of the greater strength of the US economy over the European economy, which has caused financial transactions in the US to weaken by less than in Europe.
  • But the main reason for the shift to the East is the more dynamic growth of the Asian economies, which has created a booming demand for financial services.'

Even without the new taxes and regulation, the shift of economic power from West to East would have challenged London's dominance. But rather than help the City compete with the Asian rivals, there's a risk that the government's policies (and the constant 'bash-the-rich' mood music) is accelerating decline. Given how much tax the City generates, this will only retard the recovery and prolong the economic misery for everyone else.

Tags: bankers, Barclays, City of London, Jobs, London