And they’re off
written by Brian Mairs on 18/02/2011
Hat-tip to Channel Four News for unearthing statistics from the Swiss Federal Migration Service which shows the number of British banking professionals migrating to Switzerland rose by 28 per cent last year. Money Week has done some interesting analysis on these figures too.
Now this sheds an interesting light on the oft-repeated story that if the UK continues to burden its banking industry with more regulation, taxation and general bashing then ultimately bankers might up sticks and move to more bank-friendly countries. But we feel that isn’t the real danger.
First, we are talking small numbers – 383 bankers, 1,379 financial services staff in total. But then if they are the right people, they are also bringing with them valuable business from the UK – remember financial services brings in £54bn to the UK Exchequer each year and accounts for some 10 per cent of the country’s GDP.
Second, we are talking Switzerland. The country is certainly an attractive base for wealth managers and hedge funds as well as other financial services firms, but we need to look further east to see where the really big economic opportunities are rising. The figures from Hong Kong, Shanghai, Singapore and the rest could be even more dramatic.
Third, the Swiss figures account for UK citizens only. The City is full of exceptionally talented people from overseas as well, who look globally for job opportunities and who up until now have brought their talents – and their business – to the UK. The Swiss figures do not indicate whether any of these people, attracted to the UK from other countries, are now deciding they would do better elsewhere.
And finally, we do not think that bankers necessarily leaving the UK is necessarily a problem. Yes you did read that correctly. A free market has developed over the years in financial expertise – the best people can travel anywhere. That free market has favoured the UK so far: we live in a lucky convergence of timezones, successive governments here have been considered to be commerce-friendly and we have built that critical mass of talent and expertise which attracts the best people from around the world. The predominance of financial services in our economy did perhaps magnify our exposure to the global financial crisis, though it is also helping to expedite our exit from it. Anyway - in short – the best people in the business have wanted to come to the UK, attracting with them jobs and, yes, more business.
So we cannot be that worried about these people hopping off to Switzerland next, since it’s a free market and they have at least spent some time building up the UK as the world’s financial centre. As long as others come to take their place, the system is working in the UK’s favour.
What worries us is the risk that the multi-national financial institutions of the future decide there are alternatives to a London base. If they choose to base their European HQ in a competing financial centre, we risk losing that critical mass. The slide of jobs, talent and revenues overseas will have begun, and the financial services industry will join so many other British industries on the scrapheap of history.
There is much talk of rebalancing the economy – and remember our manufacturing sector is still the fifth biggest in the world. If we want to continue to build our economy not just in financial services but in all other industries too – if we want to continue to export our goods and services around the world – we need a strong financial sector to conduct those transactions for us, to help all of those businesses to grow. This is what the UK’s banking sector is committed to doing, and what it will continue to do