As the First Post Daily reports:
Bank of England governor Mervyn King has provoked a furious response from the City after saying yesterday that many banks' only concern was to "maximise profits next week".
Warning that lessons of the 2008 crash have not been learned and the banks could now face a second collapse, King told the Daily Telegraph they are still obsessed with bonuses and said that "imbalances" in the sector "are beginning to grow again".
He added that he intends to find ways of clamping down on banks who seek to make money out of "gullible or unsuspecting customers".
King is right, of course.
But the CBI's reaction and bankers' reaction is to say they'll quit the UK.
But the odd thing is - it doesn't matter because of what George Osborne is seeking to do with UK corporation tax. After all, if we have territorial tax then we won't make anything extra by having head offices here. They employ almost no one - and often make losses in the UK tax system as it is at present. And the reality is that HSBC and all other banks will still trade here - and still have vast numbers of people here because they have to be in London and they want to service the UK economy. And we can still operate transfer pricing rules. to ensure profit is recorded - without fear of losing head offices as a result of doing so
Because Osborne has now let us say 'so what' to this threat - it costs us very little or virtually nothing in tax if companies go if we have a territorial tax system.
In which case that threat has gone - because it is now irrelevant. We can call their bluff and now without the loss of tax revenue as a an impediment move on to deal with regulation and the risk that not regulating all banks - any bank that trades here - pose to to the UK - of the type Larryt Elliott explores this morning.
I still think Osborne is wrong - but the unintended consequence of his folly is we can move on the issue of bank regulation without risk. And you have to search for silver linings.
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Bank(er)s argue that to remain a “global player” UK banking “skills” must not be allowed to migrate.
This claim ignores the inconvenient truth that it was the “skills” ofthese repulsive establishments which almost bought our country to ruin and continues to wreak havoc in our lives.
What other countries would want to import a similar disaster to theirs?
Well spotted, Richard. That really is another you need to pass to the 10 oclock live team and get more widely aired.
My sincerest wish is that when the banks and bankers start to exit the UK, that rent-a-mouth Dame Angela Knight decamps* with them, so I never have to listen to her insufferably arrogant arguments in favour of banks again.
*ideally to Rockall
@roger rabbit
How could you be so unkind 🙂
That’s really very nasty of you (thought I’d mimic the trolls for moment – couldn’t resist it)
I really liked this Golem article on how banks offshore their profits but onshore their losses (to offset tax even more).
I’d like to see HSBC moved to HK – how will the Chinese react when they need a bailout?
How about Barclays going to India? They’ve offshored most of their back office staff their in recent years anyway. Or maybe the middle east? Bob Diamond would be right at home in Dubai. Very low tax too – just don’t ask for a bailout.
And what of RBS? It can move to Scotland and be the burden of the Scottish taxypayer when it next goes belly-up.
@roger rabbit
Totally agree re Angela Knight. Wasn’t she meant to be a Tory dame by now? Perhaps she can take David “bonuses must be paid” Buik with her to Rockall. They are both fawning apologists for a failed system built on repulsive greed.