UK capital flight: ‘Investors hate uncertainty’
London's status as a key financial capital could be at threat. According to CrossBorder Capital, the UK is seeing its biggest outflow of investment in decades.
RT:What's your take on why exactly the UK is now seeing its biggest investment flight in 35 years? 360 billion is such a huge sum. Why is this happening?
Keith Boyfield: I’m not that surprised because nobody can really predict what the election result is going to be, and investors hate uncertainty. It is also, I think, attributable to the zeitgeist –there is a feeling now in London that the people to blame for all our problems are the bankers and the lawyers who have congregated here in London. Their pressure on London as a capital center has been reflected in the world rankings done by a firm named Z/Yen [Group.] More and more people are moving to places like Singapore and Dubai.
RT:The financial hub of London is no longer perhaps the world's epicenter of finance, and is facing some stiff competition now especially from Asia, Hong Kong, Singapore, Shanghai and so on. Could that be a reason?
KB: I attribute it more to the regulations that are being placed on banks. It is interesting that just in a last month we’ve heard that HSBC, the world’s largest bank, has been talking about the possibility of moving its headquarters to Hong Kong from London. And I know from personal experience that a lot of the people that I used to know working here in London have moved to places like Dubai, Abu Dhabi, Singapore, so the talent is moving. I think that we’ve probably passed our peak here in London.
RT:What does this tell us about the real British economy? I'm not talking about the stock markets but people's wages, living standards?
KB: If you look at the evidence and the facts the British economy has done remarkably well in the last few years in terms of unemployment. The fact that so many immigrants are desperate to try and get into the UK tells you something, because we’ve been creating a lot of jobs particularly in the private sector. But if we have a minority Labor government that want to bring in a lot more regulation and a lot more taxation - they’ll say for perfectly sincere reasons, you’re likely to see, in my view, an exodus of capital, and that is going to bring down the price for example of property here in London. Some people would say it was far too high.
RT:Britain has one of the biggest national debts in the world, about 80% of GDP, and it's been at this level for years. Does that impact investors?
KB: Yes, it does, it is a grave concern, during this election campaign Martin Wolf in the Financial Times said [that] it’s been very disappointing because all the major political parties have effectively been trying to bribe people with their own money. They are full of ideas about how they are going to give allowances and grants, for example, for young families to buy a home. But they are far less specific about how they are going to raise money to fund all this.
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