The departure of the super rich is an early warning siren for the rest of us
Marcelo Goulart, managing partner at the Zurich-based wealth advisor First Alliance, has been so busy helping his clients leave the UK that he’s had no summer holiday.
He tells City PM that 80 per cent of his “UK exposed” clients have either left the country or are in the final stages of doing so. He adds, with a smile, that they might come back (that is, after all, the advantage of being very rich and highly mobile) but first they need to see how they’re treated in Labour’s upcoming Budget.
To be sure, they’re expecting a pasting, via widely trailed reforms to capital gains tax, inheritance tax and the non-dom tax regime. Keir Starmer clearly considers this demographic to be the low hanging fruit, and he’ll squeeze them come the autumn.
As for the rest of us, he has declared – with startling arrogance – that he applies a strict test when discussing potential Budget policies: “If it promotes economic growth, it’s in the Yes column – if it is inhibiting growth, it’s in the No column.” If only life – or governing – were that simple.
Starmer might think he has all the information necessary to weigh up whether a policy is good for growth or not, but this is obviously not the case. In fact, large parts of his economic agenda have been described by business groups, employers, entrepreneurs and investors as manifestly bad for growth. The Prime Minister can choose to disregard such warnings, but he can’t claim that no such warnings have been issued.
The closer we get to Budget day, the more it becomes clear that the government’s efforts are focused on short-term revenue raising, rather than long-term, pro-growth reform. Worryingly, some City figures with close links to Labour lament, in private, that the Chancellor and Prime Minister have been captured by the Treasury, whose instincts are simply to raise revenue by any means necessary.
A tweak here, a loophole closed there, and hey presto – the fiscal “black hole” starts to shrink. But at what cost?
It’s unlikely that Goulart’s clients and others like them will return, and though Labour ministers may not mourn their absence the rest of us should recognise their departure for what it is: an early warning siren.