This crazy EU directive threatens our existence as a nation. We depend on the expertise of the City of London for a hefty slug of our tax revenue and if this goes through that could disappear at the worst possible time for our future.
As a contact writes to me - - - “We had lunch here with an old friend on Thursday, he works for one of the large estate agents. He mentioned that he had a Hedge Fund client on his books, who was looking for a house in London in the £10-12 million bracket, but when he called him recently he said “it is on hold as I am more likely to relocate the business to Switzerland”. This may be the tip of the iceberg !”
It’s not a fantasy world - it’s hideously real and it's orchestrated by the envy of the Franco-German axis
Christina
SUNDAY TELEGRAPH 11.10.09
1. Boris Johnson warns EU to keep out of the City
Britain's financial sector, which creates billions of pounds in revenue for the Treasury, is under threat from European legislation and an increasing tax burden on high-earning individuals, a report from the Mayor of London's office says.
By Kamal Ahmed and Helia Ebrahimi
The report, released this week, says that the status of London as a world financial capital will be undermined if new EU rules controlling UK hedge funds and private equity are given the go-ahead by Brussels.
It will also identify the dangers posed by the 50p tax rate for people earning over £150,000, new rules and taxes for people who do not live permanently in Britain, changes in capital gains tax and the points-based immigration system.
The study has been compiled by the office of Boris Johnson, the Mayor of London, who last week pleaded at the Conservative Party conference for people to stop treating bankers "like lepers".
The directives demand new controls on UK hedge funds and private equity funds doing business outside the EU which will put Britain at a disadvantage to American and Japanese funds. Critics also say that the directives make onerous and bureaucratic demands on transparency and the amount of capital funds will have to hold, putting many smaller operations out of business.
Figures last week revealed that there are more than £150bn of assets managed in London by hedge funds. The Alternative Investment Management Association says that hedge funds and private equity operations produce £5.3bn in tax revenues a year, enough to pay for more than 200,000 nurses or 165,000 teachers.
Mr Johnson, who has admitted he might be "going out on a limb" in supporting the publicly unpopular finance sector, told The Sunday Telegraph: "It is vital that we keep reminding everyone just what these funds have financed, from the jobs they create to the profits they make that feed into our pensions, and recognise that it was not these people who dragged us into the current economic difficulties."
Today The Sunday Telegraph's business section launches a Ditch the Directive campaign aimed at fundamentally changing the draft directive published by the EU earlier this year. The campaign says that good regulation and transparency is vital but that the present draft directive is unworkable.
Lord Myners, the City minister, said that the EU was in danger of acting unilaterally when there was a need for global rules on how funds operate.
He said: "It would be a significant error for the EU to close its door to alternative funds from offshore jurisdictions.
"And it would be even more regrettable if they were to disengage from the global reform process. Protectionism is never the answer."
Writing in today's paper, Angela Knight, chief executive of the British Bankers' Association, warned that the draft directive was flawed and would threaten popular finance products such as fixed-rate mortgages, which rely on "hedging" to protect providers from interest rate changes.
"The changes proposed will shift business not just out of the UK but out of Europe all together," she said
The Mayor went to Brussels recently to press London's case with Charlie McCreevy, the EU Commissioner for Internal Markets and the author of the draft directive, and said there were signs of movement.
"I realised in Brussels that I was in good company with MEPs from across the parties, and from different regions of the UK, who were all anxious about this issue," he said.
However, Poul Rasmussen, president of the Party of European Socialists and former Prime Minister of Denmark, said that the EU was right to push for stronger regulation.
"The hedge fund industry is arguing that there's no need for better regulation," he said.
"This flies in the face of the evidence and also goes against the consensus achieved in the G20 with Obama's administration and the EU on the need for tougher rules." [He’s becoming more and more isolated. The Germans have now turned against the directive. -cs]
2. Time to take a stand against Little Brussels
There are probably not too many issues on which Lord Myners, the Labour Government's City minister, and Boris Johnson, the Conservative Mayor of London, can agree to agree. But the ill-conceived and badly drafted directive on Alternative Investment Fund Management is one.
By Kamal Ahmed
The AIFM directive, overly complicated and written in that unique Euro-speak tense, the opaque future imperfect, needs a complete re-think if it is to succeed in its aim of allowing proper supervision of fund management.
Everyone can support one of the central tenets of the draft directive that risk needs to be adequately controlled but anything that becomes European Union law must be workable and, most importantly, consistent with global agreements. The G20 meeting in Pittsburg demanded nothing less than a level playing field in financial regulation. Otherwise money will flow from the over-regulated to the under-regulated, creating fresh tensions in the world financial system.
Whatever that workable version is, the present directive certainly isn't it. So today The Sunday Telegraph is launching its "Ditch the Directive" campaign, giving a fillip to the disparate voices from all sides of the business and political spectrum that are coming together on this issue. Even the Church of England, not known for its rapacious market philosophy, is praying that the EU changes its mind. This draft must go.
Next week the Mayor will launch a report on the threat to London as a major financial centre. It will have a glittering list of names attached to it, from Sir Martin Sorrell, who chairs Johnson's International Business Advisory Council, to Ian Livingston, BT chief executive, and Robert Sharp, the former Goldman Sachs executive responsible for the investment bank's European private equity and mezzanine funds.
The report, revealed in The Sunday Telegraph today, will say that the City is being threatened with death by a thousand cuts. It will touch on the tax increases for non-domiciled high-net worth individuals, the new 50p tax rate, changes in capital gains tax and immigration policy. It will say each is undermining London and, by extension, Britain's position as a place where financial services flourish and create wealth for UK plc.
One important section will be on the EU's plans to regulate financial services, which the report will quietly and effectively fillet. The arguments are straightforward. Firstly, the draft directive's capital requirement demands are based on the simple size of the fund rather than the actual risk attached to the fund's activity. Second, the draft directive treats many different types of hedge fund and private equity vehicle as if they are doing the same job and require the same regulation. Third, the draft directive will throw up an artificial wall against funds in non-EU countries, cutting off opportunities to do business and create revenues around the world. Such protectionism, if carried out here, would be rightly be dismissed as having the whiff of Little England. This is Little Brussels.
New figures from Hedge Fund Intelligence reveal that there are more than $200bn assets under management in London, second only to New York. The next largest centre in Europe? Paris at a lowly $10bn. No wonder continental Europe may shrug its shoulders at the possible impact. But we must make a different argument. The tax take from the hedge fund and private equity sector in the UK is estimated at £5.3bn per annum. That's a lot of nurses and teachers to put at risk if this directive was ever to make it to the statute book.
Posts
