Brexit uncertainty in the City made worse by Tobin Tax threats?

[TheaSaurass]

As EU negotiators trying to force through their Brexit agenda on their ECJ supreme over our courts on EU matters, and the insistence that the UK has to pays a huge divorce bill without itemised detail, which pushes back the talks of trade and other business matters – businesses and the City are getting nervous, as all that EU uncertainty together with the most UK domestic political risk in nearly 40-years – is understandably, now affecting UK growth.

With that backdrop, the City is now trying to work out how much of their UK head office business with Europe needs to relocate to a Eurozone city, to maintain EU financial passporting rights to do European business, we get another HM Opposition Party ‘Marx Brothers’ production making things WORSE for the UK.

As the Shadow Chancellor John McDonnell holds series of meetings with the Investment Banking industry, telling them how under an imminent(?) Labour government, they will impose taxes on their cost of doing business – that no doubt in my mind, will mainly be passed to us after each financial transaction – as their tax in many cases will be more than the current bid-to-offer price spreads they quote to institutional clients, managing funds.

”Labour alarms bankers with Robin Hood tax”

So the idea of a Tobin. or Robin Hood Tax, has been around for decades, but usually is ignorantly founded on some belief that the majority of transaction done each day, are deals the investment banks are doing for themselves, not ‘account client’ transacting with the global Fund Managers in bonds. Equities. Commodities and foreign exchange markets – with £6 to £7 trillion in assets e.g. Pension Funds, managed by those global managers with offices (and around 90,000 jobs depending on that industry) in the UK alone.

So not only would this new tax for a City doing huge transactional volumes every day be difficult for Investment banks to administer, but for the majority of transactions, the costs will be passed on to the fund managers, who in turn will pass it on to us.

For a UK looking to find its way after Brexit and large international companies are analysing where they should be located, I cannot believe a worst time for Westminster opposition politicians obsessed with growing taxation rather than the overall economy, making visits with threats of future increases in their costs of doing business in London.

A Tobin tax would end hedge funds being in London, as well as a lot of trading activity, and a very significant number of jobs in trading, settlements, custodianship etc would go as well.

The tax would not raise anything like as much as they think it would, and as speculators would not pay it (they will have left as trading in the UK would not be profitable) the only payers would be those who for legal reasons can't move like pension funds.

Corbyn does not care about the UK economy, he only cares about his student politics. Just look at the team he put together for Bank of England economist Danny Blanchflower and hippy French Economist (and DV perp) Thomas Pikkity. How many times did Corbyn consult them? Zero.

SoloD
We are told in the OP link that the ‘expert’ shadow chancellor McDonnell wheeled in to provide the City ‘technical’ expertise, I assume in a ‘poacher turned gamekeeper’ role, was an ex Hedge Fund manager Avinash Persaud, who tells us for nothing, that HE thinks that the City has become too large.

Indeed Mr Persaud goes on to say that HE thinks there is a ‘right size for the financial sector, its currently absorbing a lot of resources(?), and becoming a disproportionate impact on politics’.

All this from an UNELECTED to government chancellor who wants to ‘change capitalism’, and his highly over opinionated and UNELECTED to any position in Westminster, mouthpiece, trying to use an elephant gun tax to try kill a speculative rodent.

Sure the world could do without the likes of high-frequency trading, but taxing it out of London does not stop it appearing in any other global centres such as in the Americas, Far East, or even exchanges in Europe – and as you say, the transacting/booking of any deals could be forced out of the UK.

And within his own industry, many would say that such programme trading creates liquidity in markets, as the ‘value’ reason why a system might buy and sell securities, could be different to other fund managers or private investors with different investment objectives, who can then use that liquidity to buy or sell the opposite way, for their own needs.

Whatever, the point is I can’t think of a single reason why another Marx Brothers comedy production has either the front, or democratic right, to further spook the City currently making Brexit choices of how much of their business they NEED to permanently relocated to Europe, in order to continue doing business in Europe – especially as there are more in the City that fear the economic feckwittery of a Corbyn/McDonnel administration, than Brexit.

For a City that across the capital markets must trade in the trillions every day in different asset classes and for different client types, for UK politicians that detest capitalism, putting more taxes on the City must make so much sense whether the City is under severe pressure or not – but it’s a sign of the new ‘alternative’ government times, when those capitals in Europe that have coveted £60 bil plus a year in direct taxes it already brings in to the UK – offer to LOWER taxes and LOWER employee friendly labour laws, to gain market share.

France who 5-years ago imposed a punitive 75% tax on top earners (before cancelling it a few years back as raised just a few hundred million Euros a year), to gain City jobs is telling them that ‘France is changing’ and to back that up they will; relax labour protection for City firms, lower their Corporate Tax over the next parliament to 25%, and they will scrap a current French financial transaction tax.

“Paris Aims to Overtake Frankfurt in Race for Brexit Bank Jobs”

Whereas in the UK, there is John McDonnell telling City institutions in London that any time soon ‘the UK is changing’, as Labour will INCREASE labour laws (that resulted in much higher Eurozone unemployment rates than here), and will be INCREASING Corporate Tax, together with the IMPOSITION of City transaction tax, that will mainly be passed on the bank’s clients who need to transact e.g. pension funds.

A UK 'back to the future', if you will.