Monday, May 17, 2010

Bank Watch: on greed, threats and media nonsense


Last Autumn households up and down Britain held their breath in anticipation: the then Chancellor of the UK Exchequer, Alistair Darling, had proposed an increase in the top rate of income tax from 40 to 50 percent, and top City of London bankers were threatening to leave the country in droves. Their destination: Switzerland.

Sadly, this didn't come to pass. The new rate was agreed and is unlikely to be reversed by the new Tory administration. But the bankers have failed to live up to their promises to leave. And here's why: a new study covered in today's edition of Swisster newsletter reveals that the after tax earnings of overpaid bankers in London vastly outstrip those of their overpaid counterparts in Zurich and Geneva:

London bankers’ net earnings continue to outstrip those in Zurich or Geneva, says a study. The difference in salaries means the monthly pay check is, for the most part, still higher in London, even after a new 50 percent tax left by the outgoing Labour administration. The survey’s findings discredit the notion of a mass exodus of financiers from the City to escape the new tax.

This comes as no surprise to those of us who have long understood that London operates on a vastly larger scale than either of the main Swiss financial centres, making it less than likely that Britain's financial "talent" - their term, not ours - either could or would actually want to find employment there.

What this study reveals, however, is that Britain's financial press, which has a shockingly poor record for independent and critical analysis of the endless nonsense pumped out by financial PR companies in London, has yet again been used as a vehicle for political threats against any measures that might curtail the greed and sheer uselessness of the UK's overblown financial services sector.

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