Battle Stations Ready!

It’s only been a few days since John Varley, chief executive of Barclays threw the second punch, in what is either going to be a nasty, prolonged battle, or just fiery rhetorical exchanges with the Chancellor and Prime Minister over the banking bonus tax.

Mr. Varley suggested that if the government goes ahead with its 50% tax over £25,000, then bankers will leave the UK and work elsewhere, ultimately damaging the home economy. Now, Goldman Sachs has weighed in, saying they are prepared to move 20% of their 5,000 staff to the friendlier climate of Spain. If this rings a faint “who cares?” bell in your head, lest we forget that Goldman Sachs was the biggest contributor to putting money back in the government (public) purse last year, often exceeding £1bn in personal income tax, and last year topping £2bn in corporation tax. And if you don’t live in the UK, it’s interesting to see who actually wears the proverbial pants in the family – is it government or is it big business? Who dictates to whom? This is an issue relevant for any capitalist country right now.

This is shaping up to be a proper battle, which could ultimately backfire against the Chancellor if all the banks get together on this mutiny. I can’t imagine it will be hard to convince pale city boys to decamp to sunny Malaga AND earn loads more money in the process. It wasn’t smoke that Varley was blowing when he said that banks are global, mobile enterprises that can operate anywhere and certainly aren’t beholden to one location or another. This is proof that the heat is on, and I fear the government will not bow on this one, as it would be a public relations disaster, which could ultimately end up being a much greater disaster for the UK economy in the long run.