http://www.bloomberg.com/apps/news?pid=20601087&sid=aXKFa5Ml.47s&pos=1
I actually think this is probably quite significant in the scheme of things.
Having been mocked, reviled and ridiculed now that times are really tough, it was ever divined that they should lead the rest of the rabble by example.
All very tongue in cheek, coming from me. But when you consider that the Goldman model has been adopted by just about every Thomas, Richard and Harold (perhaps in a similar vein to the now extinct Ford model, obviously for different reasons and in a different world) they were always going to be the ones to get leaned on by the Special One in the suit.
As far as the UK’s PBR and its ramifications are concerned, firms were already looking at ways to minimise the impact of any punitive measures and were considering a number of options including increasing bankers’ salaries in return for reducing the bonus element of their pay, beefing up benefits (such as paying school fees) and reclassifying bankers as consultants, thereby making them self-employed businessmen, oops sorry, persons, and escaping any banker tax.
Banker tax – I love it
In fact, one Asian City bank is believed to have already allocated at least two years’ worth of bonuses in the past few weeks. And the big four accountants and magic circle law firms, that charge up to £600 an hour for advice on two-steps-ahead-of-the-Revenue tax avoidance schemes, had long since set up teams of experts in anticipation of studying the Chancellor’s proposals.
So, the upshot of dear Darling’s announcement, as one rubber-of-hands-together has already stated, “has nothing to do with reducing the public spending deficit, and it may well be contrary to Human Rights legislation as it is unprecedented in the sense that never before has a UK government sought to levy a special tax relating to individuals working in a particular sector.”
All in all, there has been much ado about nothing, it’ll likely prove difficult to gauge how much tax the measure will actually raise, as considerable time and effort will be expended by bankers to get round it. The Treasury has better prospects of looking foward to increased revenue from the considerable time equating to billable hours involved for all concerned.
One serious note though. Jamie said yesterday that “traders fear the UK banking sector could be badly hurt by the combination of EU heavy-handedness and punitive tax policies, permanently killing the UK’s golden goose. It was a fun 25 years while it lasted…”
That’s the contradiction neatly summed up in a nutshell really.
Bank lending constitutes about five times UK GDP. If it carries on growing without substantial increases in banks’ capital base – which has been declining proportionally for 30 years – the next bailout would overwhelm the British economy.
Surely the City is a national asset only if it is self-sustaining.
I am reliably informed by a good friend, who has had many top floor dealings with City slackers, that 4,900 of the purported 5,000 £1m+ earners are nothing short of a waste of office space. So the talk that any insistence that banks should recognise the quid pro quo element of obligations vs rights to their handouts will be met by an exodus of ‘talented’ staff to other countries, fills me with pleasant anticipation.
And I don’t understand the fuss about a possible exodus to Switzerland – a country that was nearly brought to its knees by the UBS.
So rock on, Tommy – because the midget frog’s on the case now too; fortunately for the proletariat though, someone had the foresight to transcribe Gordon’s Dear Nicolas letter for us, or we should never have known.
http://www.reuters.com/article/idUSGEE5B91S820091210
Very soon now, doubtless there’ll be a global riot.
Prior to their most recent petit tiff, Sarkozy memorably declared, “you know, Gordon, I should not like you – you are Scottish, we have nothing in common and you are an economist” [hoho, he got that bit wrong]. “But somehow, Gordon, I love you … but not in a sexual way.”
Gosh it was only in February that the French President had said the Prime Minister had ruined Britain’s economy:
Puts Bernanke a bit behind the door really
