Strong Commitment from Chancellor Needed says BDO
As the Chancellor puts the final touches to his greatly anticipated Emergency Budget speech, new research from BDO LLP suggests that The City is still feeling nervous about the impact of a coalition government and some international businesses have one eye on the door.
Over half (53%) of the FDs and CFOs of Capital Markets, Investment Management and Banking organisations questioned in the survey have thought about moving some or all of their business abroad as a result of current and anticipated UK tax levels.
Just under a third (32%) of respondents had gone as far as assessing the viability of moving some of their business abroad. A quarter (25%) of those felt they could move 75% to 100% of their business overseas and a third (33%) felt they could move up to a quarter of their business abroad. Two-thirds (66%) of respondents felt that overseas jurisdictions will have a competitive advantage recruiting and retaining top executives in the future.
Andrew Richardson, director in the financial services practice at BDO LLP said:
“It is obviously a concern that so many firms have considered the practicalities of moving some of their business abroad. A quarter of respondents felt that London can once again be the number one worldwide financial centre within five years, but there does seem to be a feeling that there is real competitive advantage in moving business overseas.
“The Chancellor has an unenviably difficult job to do in the coming weeks and months, balancing business and public needs with necessary cuts in spending. But, the clear message from financial services businesses in the UK is that they need to be shown a solid commitment from the government that the UK really can be the number one place to do business.”
The survey also found:
Just under half (45%) of respondents were unsure as to whether the possible handing over of banking supervision to the Bank of England would affect their business. Thirty-nine per cent were sure it would be beneficial.
Firms were divided over whether London would regain its competitive position over New York within the next five years. A third (34%) felt that London would not be able to climb back up the ladder, whilst a quarter (24%) were confident that London would be back on top.
More than half (53%) of CFOs that the coalition government’s post-election measures have made them feel more confident about the UK’s commitment to making the country a good place to do business, but a quarter (27%) feel there has been insufficient clarity on the measures.