London Luring Foreign Companies With Low Taxes as Banks Retrench
By 2015, the rate will drop to about 20 percent, compared with about 29 percent in Germany and about 33 percent in France. The U.S. rate is 40 percent, though deductions mean few companies pay that amount. Five or ten years ago, a lot of companies were thinking about moving to places like Ireland or the Channel Islands, said Dan Schuster-Woldan , a partner at law firm Linklaters . Things have changed. There are now fewer companies going that route because the tax differential is lower. Tax Neutral Noble is one example. Chief Executive Officer David Williams said in July the move would be tax-neutral for the company — showing how U.K. tax changes have made the country comparable with Switzerland. The average Swiss corporate tax take is about 18 percent, and as high as 24.4 percent in some regions, according to accountancy firm KPMG. Other firms with U.S. roots have done the same. Aon Plc, the worlds second-largest insurance broker, last year moved its headquarters from Chicago to London, saying it would give the company better access to emerging economies and the Lloyds of London insurance market. Taxes also played a role, as the company cited a U.K.
Second, the next general election wouldn’t be the first that politicians have fought entirelyon the economics of the capital city, and it won’t be the last. The sheer, dysfunctional exclusivity of the London housing market is obvious to everyone: the fact that the coalition, with its Help to Buy scheme , is answering a crisis of affordability by shovelling more money at the richest people they can find merely reflects theintensity of their conservatism. Itdoes not suggest that they’re not aware there’s a problem. Everybody knows there’s a problem. David Cameron denies this will create a bubble, saying that he’s empowered the Bank of England to stop a bubble being created. This is a little bit like saying you’ve empowered the Bank’s governor, Mark Carney, to stop it raining. If the debt needed to buy a house is far more than most earn, the ratio of household debt to GDP will be very high, and banks will be over-leveraged. These are the preconditions for a housing bubble. This isn’t the view of Marxist economists, it’s the view of as mainstream a figure as this year’s Nobel prizewinner in economics, Robert Shiller . But there is a reason why Cameron is so unruffled by the idea of a bubble, even if it’s not his given reason: there is a perception which is not, in the short-term, unfounded that the bubble in the south-east cannot burst. The reason is foreign investment, which runs all the way from the premium properties (75% of central London newbuilds are sold abroad before they even appear on the UK market), to typically undervalued areas, like Brixton in south London, where an estate agent told me recently: “It’s actually not so much young professionals, it’s foreign investment, buy-to-lets.” Since people still need to live in the capital, those still almost able to buy are shunted further out, and even quite distant towns take on the glister of London prices. None of this means the bubble won’t burst eventually, but it does mean it will take longer than the 18 months we have to go until the election, and that when it does, the bust probably won’t function in the classic way. The house price crash of the early 1990s meant the genuine degradation of capital. Mortgage companies had fire sales and houses were auctioned, sometimes for less than they were worth.
London cabs will promote Philadelphia
The announcement came in the middle of a five-day British trade mission to China led by finance minister George Osborne. On Monday, Britain unveiled simpler visa rules aimed at luring Chinese tourists. Osborne’s trip marks a return to normal exchanges after Beijing derailed a planned visit by Prime Minister David Cameron in April in retaliation for the British leader having met the Dalai Lama, the exiled Tibetan spiritual leader. Investors in London will be allowed to apply for licenses to invest yuan directly into China, Osborne announced. He said the Chinese central bank set an initial quota for London of 80 billion yuan ($12.7 billion). Tuesday’s announcement put London ahead in the race by global financial centers to gain a share of yuan-denominated business as Beijing gradually expands use of its currency for trade and investment. Hong Kong was the first financial center outside mainland China where trading of yuan was authorized. London banks have traded yuan since early last year. “Now London is a major global offshore center for the trading of the Chinese currency,” Osborne told reporters. Britain and China signed an agreement in June to have their central banks swap 200 billion yuan for 20 billion pounds. The European Central Bank and Beijing announced a similar agreement this month to swap 350 billion yuan for 45 billion euros. That suggested Frankfurt also might be in to become a center for business denominated in yuan. Also Tuesday, Osborne said China’s state-owned banks will be allowed to expand their operations in Britain by setting up wholesale branches.
London to Become Hub for China’s Yuan
The campaign was launched this week by Mayor Michael Nutter and the Philadelphia Convention & Visitors Bureau. Email | Twitter | Google+ | LinkedIn London cabs are bearing advertising promoting Philadelphia. The campaign launched this week by the city, the airport and the Philadelphia Convention & Visitors Bureau is promoting Philadelphia as a destination for trade, conventions and leisure travel. Next month Mayor Michael Nutter will take a trade mission to London and Tel Aviv, Israel. In London, hell attend the World Travel Market trade show, where some 47,000 travel professionals are expected. Philadelphia will have a group at the London show, including Jack Ferguson , president and CEO of the Philadelphia Convention & Visitors Bureau. The delegation will host an event for airline executives, urging them to add international flights to Philadelphia International Airport a move that could net business and leisure travelers. Through these relationships, we will attract new international travelers, students, investment and trade opportunities for Philadelphia businesses, and create new jobs for Philadelphians, Nutter said. Nutter and Ferguson will attend the World Travel Markets ministerial dinner on Nov. 5. It will include tourism ministers from around the world. The magnitude of this mission is powerful with so many partners from various business sectors coming together to promote our great city as a hub for trade, travel, education and innovation, while positioning Philadelphia a world-class destination, Ferguson said. As part of the promotional effort, 11 London taxis have been wrapped with Philadelpia messaging and images, which will also appear on interior headrests and taxi receipts.