Could the UK’s financial services sector be on the brink?
As news of HSBC’s possible move from its London headquarters to Hong Kong hit the headlines this week, I’ve been quoted in the media that the UK financial services industry is reaching “a tipping point.”
This sector is punching well above its weight in the UK – as I told the press – and this latest news from HSBC, which has been based in London since 1993 after acquiring Midland Bank, should be a long-overdue wake-up call that continual tax increases could irrevocably harm the UK’s financial services sector.
To my mind, to maintain the country’s world-class standing in the finance industry, the government must adopt a steady, more rounded approach and work more directly with financial services organisations themselves.
The numerous rises in the bank levy introduced by Chancellor George Osborne over the past four years, as well as additional key factors, have led the industry to a tipping point. As is evidenced by the statements from HSBC this week.
Targeting banks in this way, it would seem, is directly affecting significant investment decisions. Although other banks and financial services institutions may not follow suit straight away, there will be damaging consequences for Britain should more organisations move their operations out of the country.
UK regulators too have generally exercised wise caution not to introduce punitive rules that shrink the industry and, ultimately, adversely affect individuals who need financial advice, products and services. The government should learn from this approach – there is a huge amount of tax revenue, jobs and other direct and indirect economic boosters at stake.
HSBC’s potential move out of London’s Canary Wharf to Hong Kong is a clear sign that if the financial services sector becomes too onerous, major players will move. I suspect to places such as New York, Hong Kong, Dubai, Singapore and Frankfurt. There will be many more supporters in these cities hoping London carries on as it seems to be right now…
It is paramount that the UK must focus on remaining more competitive than ever in order to uphold its status in the increasingly globalised industry.
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