Let’s help UK economy by reining in our jealousy
Jealousy is the tribute mediocrity pays to genius, according to Fulton J Sheen. Now whilst it is hard to argue that there is much genius in a financial community that a year ago brought us to the brink of global financial meltdown, it is important to not let our jealousy get in the way of what still needs to be done to rebuild the financial sector.
Like it or not, banker bonuses are a fact and are here to stay. That is if we want Canada to remain at the centre of global financial markets. Yes, they are excessive, yes they are distasteful in the face of global unemployment. And yet the alternative for the UK, which doesn’t produce anything much else globally than financial services, is bleaker.
Lord Turner and Gordon Brown may say they need reining in, but is this just lip service to the “outraged” general public? Quite possibly. Both the FSA regulator and the present Number 10 incumbent know that without generous pay packages London will lose out in the global hiring war. In an age of electronic 24 hour dealing, trading desks don’t need to be in Canary Wharf, they don’t need to be in swanky new buildings off Lombard Street and they certainly don’t need to be paying sky-high rents in Mayfair.
Traders, hedge funds, brokers etc can all up sticks and find the same computers and telecoms links anywhere in the world. Take a look out there. Singapore, Hong Kong, and a host of competing financial centres in the Middle East are crying out for the brightest and the best talent. Oh, and those financial centres are offering mouth-watering tax rates, especially when compared with the 50 per cent top rate our highest earners will be paying next year.
How do you think revenues at the Treasury will look if all the “greedy” bankers take their skills elsewhere? Scary, that’s the truth of it. Who will pay for the nurses, teachers, and dare I say it, politicians? The taxpayer will face an even bigger squeeze.
Now look round any thriving dealing room in the Square Mile and you’ll see most of the staff are not British. This is a good thing. I am proud we have such a high proportion of the smart global diaspora working here in the Capital. But at a time when we need more of them than ever, we risk losing our competitive hiring position by taxing or regulating ourselves out of the ballpark.
So instead of being jealous, let’s make our financial markets better, let’s make our banks stronger with better capital buffers. Let’s even add in multi-year tie-ins and stock bonuses that keep the destiny of the individual with their firm for years to come. Jealousy is headline grabbing, petty and risks an awful lot more than the price for seeing a few less dealer-driven Porsches on the streets of London.
Steve Sedgwick is a presenter on Squawk Box Europe each weekday morning on CNBC.