Government tax raids on banks may see them quit UK

Monday 20th April 2015

Government tax raids on banks may see them quit UK

"Investors call on HSBC to leave London over taxes", The Times, p.39

When the UK government summarily increased the tax levy on UK banks in the last budget, we said at the time that such off-the-cuff raids on the UK's financial institutions may have repercussions. HSBC is holding its annual meeting on Friday amid pressure from investors (particularly from the Far East) to quit London, where they argue it has become too expensive to do business. HSBC and Standard Chartered will pay £1.3 billion this year as a result of the new tax, double the amount paid for 2013; moreover, the UK's Labour party intends to raise the levy still further to fund its social programmes should they be successful in the upcoming election.

In the court of popular opinion, governments have been able to get away with such moves as the general public currently has little sympathy for the banks; but it smacked of short-termism at the time and the ramifications may now be coming home to roost. The financial sector is such an important part of the UK economy that any measure that undermines London's status as a Financial Centre may come to be seen as shooting yourself in the foot in a big way.