I used to work for the French bank, Banque Nationale de Paris, generally known as BNP. They used to employ about two thousand people in their large, London offices. All their front-line trading staff were in London, not Paris.
When I visited Paris, I asked why. I was told very simply, it is because we cannot fire people even if they are hopeless or for cause. Being a trader, is doing a job like no other – results are completely quantifiable. You either make or lose money. It’s not a sort of an evaluation process, or qualitative assessment – in fact the complete opposite of most public sector jobs. The only equivalent is sport.
So even if a trader loses millions or never turns up for work or decides only to work until 5pm because of some working time directive – even though all the events took place at 7pm that day because of some American number, you cannot fire them in Paris. The result – all the high earners, including many French nationals, worked and paid tax in London.
And that is a lot of tax that France is losing.
So it was interesting two days ago to see that Chanel is moving its headquarters to London. As Guido Fawkes put it, ‘Sacre Bleu.’ So much for Brexit fear mongering, the exact opposite seems to be happening and you have to wonder why. Is it perhaps because French and EU regulations are so burdensome? Is it that they actually think there is more hope in the UK than in the dying embers of the European superstate?
Chanel told the BBC that; ‘London is the most appropriate place to do that for an international company. London is the most central location for our markets, uses the English language and has strong corporate governance standards with its regulatory and legal requirements”.
And is likely to strengthen all those traits after Brexit – if May and the mandarins, ever allow the democratic will of the people, ever to happen.
The other interesting thing last week was John McDonnell’s speech at the TUC last week.
He slipped in a little line about an obscure thing called the Tobin tax. I wonder how many of his audience understood what it is.
This is a proposal to tax all financial transactions in the city of London. No numbers of course were mentioned in the speech so it is impossible to say if it is 0.1% or 0.5%.
What McDonnell does not understand is that in the blink of an eyelid, all that business can have moved to Singapore – literally the time it takes to get those traders an air ticket and a flat. The financial world does not have fixed assets, it only has people – and as French learnt to their cost, those people will and can move. Everything is electronic. Shares and currencies can be held and traded all over the world. You do not physically have to be in London.
It will produce exactly the result that we do not want. Instead of becoming the Singapore of the world, we will become the France of the world.
Since 1990, Singapore average salaries in sterling terms have gone from £500 to £5000 a month. Meanwhile the British average has gone from £1000 to £2000.
It says it all really.