The Metropolis

"Give me your traders, your brokers, your greedy bankers yearning to breathe free"

Mike Bonnet | Thursday 2 February, 2012 11:29

_{London’s answer to the Statue of Liberty}

As a nation we are quite susceptible to the criticism of being too London-centric. And as someone proudly born and raised outside of the capital I have no desire to dispute this charge. In the interest of accuracy however, I would like to recommend a slight amendment: City of London-centric.

On Tuesday, David Cameron once again reaffirmed Britain’s opposition to the Financial Transaction Tax (sometimes referred to as the Robin Hood Tax or Tobin Tax). Whatever you want to call it, it is in Cameron’s words “madness” for EU states to unilaterally push ahead with the tax, although he has made noises in favour of global implementation. Not that Nicolas Sarkozy is listening; the French premier announced that France plans to go ahead with a 0.1% tax on the fast-trading of shares.

Bilingual Boris

This in turn prompted Boris Johnson to extend a cordial invitation to French bankers to bring their business to more hospitable climes across la Manche:

“Bienvenue à Londres. This is the global capital of finance. It’s on your doorstep and if your own president does not want the jobs, the opportunities and the economic growth that you generate, we do.”

It’d be easy to dismiss this as simply the latest installment of spirited banter between la perfide Albion and the Frogs. And popular sentiment does suggest that getting one over on the French in this manner can’t be a bad thing.

Don’t bank on it

But inviting more bankers to London is that really a victory we want to claim? Boris’s overture sounds like it is directed to a group of noble exiles unfairly penalised at home. I’d suggest a band of travelling mercenaries unwilling to pay their fair share is closer to the truth, with London offering its City square-mile as sanctuary.

The pragmatic argument against the Financial Transaction Tax is that because the UK economy is so heavily reliant on financial services any extra tariff imposed on this industry may cause it to flee elsewhere at the cost of many jobs and many billions of pounds. I’ve always found this line of reasoning just a short step away from blackmail. “Make us pay anymore and we’ll leave” seems to be the bottom line.

But is this really a credible threat? As Cameron has repeatedly stated, in the UK stamp duty of 0.5% is already levied on share transactions, a charge that is both currently absent in Germany and France and significantly lower in the USA. Surely if banks jumped ship at the mere drop of a hat as we are led to believe, London would already be bank-less? Clearly it’s not just a laissez faire attitude to regulation that has led to London’s pre-eminent status in the world’s financial markets.

Cocaine and pulling

The same attractions which lure students, teachers, builders, doctors and postmen to London, will also draw bankers. After all, bankers are people too and, as Ken Livingstone has colourfully noted, their motivations are not always financial.

In one of his first speeches as Prime Minister, David Cameron proclaimed: “We will help to rebalance our economy, ensuring that success and prosperity are spread more evenly across regions and industries”. How exactly does relocating a French banking diaspora to London fit in with this game plan? Much like being theoretically in favour of a Financial Transaction Tax but refusing to participate in its EU wide implementation and directly propositioning its discontents, it smacks of insincerity.

Hungry hungry hubby

Last February in an attempt to define Londonism, (the capital’s unique ideology), The Economist described London as “pro-finance, pro-immigration and hungry for investment”. The city it concluded had “long ago made the transition from mere capital to global hub.” This assessment still rings true, but with London preparing to profit while Europe prepares a Financial Transaction Tax, the city is in danger of adding another distinct characteristic to its makeup: safe-haven for outcast bankers.

Boris Johnson likes to joke about the superiority of his Classics degree compared to David Cameron’s PPE qualification. But if the London mayor earned his 2:1, he’d do well to remember his Aristotle: “The trade of the petty usurer is hated with most reason: it makes a profit from currency itself, instead of making it from the process which currency was meant to serve. Their common characteristic is obviously their sordid avarice.”

Snipe – Ken Livingstone says London’s supply of cocaine and women will keep bankers happy here
Photo – Wikipedia

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