The deserving rich
PASS the hat round today in aid of the City's deserving rich, and you would be lucky to get much of your hat back. It was bold, then, of the Chancellor to talk about cutting the top rate of tax so as to compete, on rewards, with America. The competi- tive edge has certainly shifted. Overseas bankers and brokers in London have lost the special tax concession which had kept them here when our top marginal rate of tax was 98 per cent. The top US rate is now 28 per cent. Add in the collapse of the dollar, and you are told that the relative cost of keeping a man in London rather than New York has, over the last few years, quadrupled. The effect of this is obscured, at the moment, by the cloud of smoke still settling after the Big Bang. Foreign banks are continuing to move capital-related operations into London. Deutsche Bank has already moved its capital markets department from Frank- furt, and Banque Nationale de Paris will
this year move its whole capital market team from Paris. 'The present advance of London', says BNP's Daniel Metadier, 'with its intensive array of expertise, will take more than a decade to be de-throned if it ever will be'. American banks, though, are reviewing their operations, looking for those which could be done as effectively and more cheaply at home and that tendency wants watching. A service export industry bringing in a net £7,500 million a year (financial services, latest figure) has to keep an eye on its costs.
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