Samuel Johnson thought that London offered all that life can afford, and anyone who tired of England’s capital city must be tired of life.
Some 300 years later, London maintains a unique position as a melting-pot for the world’s ideas and people. One of the most multicultural locations on the planet, it enjoys a dizzying selection of shops, restaurants and arts venues, architectural jewels ranging from medieval palaces to glass skyscrapers, and access to top-class school and higher education opportunities. The city is powered by the engines of finance and commerce that have provided the energy for its expansion since Roman times.
London maintains a unique position as a melting-pot for the world’s ideas and people. Despite this, for every enthusiastic Dr Johnson there is a Dickensian Scrooge. Brexit was widely forecast to begin an exodus of talent from the UK and London in particular. Although it is probably true that in finance, leaving the EU has opened the door for Paris and the European banking hubs in specific sectors of the industry, the mass departure of staff has not so far materialised.
While the anticipated flood of bankers moving from the UK to Paris is more of a steady trickle, there are potential headwinds to be aware of, though. One of Labour’s signature tax policies – changes to ‘Carried Interest’, which is effectively a share of the overall profits of a private equity fund paid out to the fund’s investment managers – has threatened to alienate individuals within the private equity industry, which was worth c. £5.1 billion to the UK in 2023.
Labour’s aim to raise £565m from closing the “carried interest loophole” has been met with warnings from wealth advisors, as if the uplift goes ahead as planned, there may be a significant ‘uptick in relocations’ amongst wealthy executives. For context, in the UK carried interest is currently taxed at 28%, with proposals to increase this to 45%. This is a stark contrast to European cities like Italy, where carried interest is taxed at 26%.
There is some risk of key executives migrating and leaving the UK as a result of this, with Paris and Milan tabled as solid alternatives and considered by some as the ‘only real threats to London’s prime property hotspot’. With these cities boosting similar lifestyle pulls i.e. luxury fashion, standard of education and preferential lifestyle amenities, many executives could be considering a relocation.
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