Expats working in financial services less likely to move back to UK, experts say

by Ray Clancy on April 29, 2010

Expats working in the financial industry are being put off looking for jobs in the UK because of  the new 50% tax rate and new taxes on bonuses, it is claimed.  The tax rate, which applies to income of more than £150,000 a year is deterring bankers located  overseas from a move back to Britain, according to a leading firm of City headhunters.

‘Brits overseas are much more reluctant to move back. For instance, it is almost impossible to lure back someone from a large financial centre like Hong Kong at the moment,’ said Chris Gaunt, a principal in the financial services unit of Heidrick & Struggles which has recruited some of the highest paid figures in the City.  

But he also explained that fears that bankers were queueing up to leave London was a myth with most senior finance staff declaring they want to stay in London despite the new taxes.  ‘People are asking to be taken out of banks for jobs in other parts of the industry.

Hedge funds and private equity are top of the list. We are not seeing anyone looking to leave London, or at least only in small numbers, but we are seeing people wanting to leave banking,’ he said.  His experience over the last month supports the growing confidence in the commercial property sector that London’s financial district will successfully overcome threats from rival centres.

But elsewhere there are concerns that experienced bankers are attracted by better tax regimes overseas. HSBC boss Michael Geoghegan said: ‘I know a large number of bankers are moving out of the UK’. And Barclays claimed that London stood to lose some of its brightest and best financiers following the tax hike on highly paid workers in the UK.

Geoghegan also said that traders and corporate financiers will want to move out of the spotlight currently shining on banks into less regulated and potentially more profitable firms.  ‘All will move to what I call shadow banking or twilight banking, where they will not be regulated, and I think that is a risk and it may well lay the foundations for a future problem in financial services,’ he warned.

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