UK
Guest comment: The City must not drive away its skilled staff
4 June 2008
There are four all-important factors in the City of London’s business success. A sensible tax regime, appropriate regulation, strong infrastructure and last, but by no means least, a very deep pool of top skills.
Our latest Global Financial Centres Index suggests London is still the leading financial centre globally. However, we cannot rest on our laurels: between September 2007 and March 2008, our lead over New York halved.
London’s diminishing lead was primarily down to Northern Rock and the resulting loss of confidence in the British banking system. However, the tax treatment of non-doms also put off some high skilled people from coming, and was raised as a significant concern by many people.
The importance of having a deep pool of skilled financial services staff is difficult to underestimate. It’s no coincidence, for example, that London and New York together have nearly 50% more top global executive MBA programmes than the other eight centres in the top 10 combined.
London and New York also rank in first and second place respectively for ‘people factors’ on our index, a category that covers flexibility of the labour market, business education and the development of human capital.
What must be done to maintain London’s lead? Some of it is down to quality of life, the visa regime, and immigration policies – 30% of City of London jobs are filled by people from overseas. We need to compete with the rest of world for the right people to fill our jobs and to allow the very best to study and work here.
It’s also down to nurturing homegrown talent in our own universities. Our index shows that centres which invest in financial skills at university level benefit from higher scores.
The skills required must track the needs of the marketplace. Right now, perhaps the skills we should be encouraging are those of the ‘globalist’– the individual who is comfortable in many languages and cultures and capable of managing business across continents. The threats posed by competition for such talent and the business it generates are real.
While most politicians at least pay lip service to the City’s role in the current and future prosperity and competitiveness of the nation, what worries me is that some have still to grasp the full significance of the financial sector to London and to the UK.
Moves like the tax on non-domiciled residents offer a direct disincentive to international business in London, as well as an opportunity for London’s competitors.
London is Europe’s global financial centre. When European politicians intervene in business decisions, or press for increased regulation and a more aggressive tax system, they may not be aware of the impact on a global city such as ours.
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Stuart Fraser is chairman of the policy and resources committee, City of London Corporation.
London's success is mainly a consequence of the failure of competitors. Consider the stiffling regulatory and unwelcoming immigration regimes in the US, the visceral reaction to investment banking pay in Europe, and the failure of Asia to be a destination of choice for the vast majority of foreign talent. London really just needs to avoid shooting itself in the foot to come out fine.
Observer 08 Jun 2008
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