City’s financial sector to grow by 100,000 new jobs within 10 years, predicts hedge fund.

London’s role as a financial centre is set to be boosted by the economic growth of emerging market countries, according to a top City hedge fund.

“The idea that London is going to full of tumbleweed in 10 years is not credible,” Savvas Savouri, chief economist at Tosca, told the Financial Times – contradicting many bankers’ gloomy predictions about the demise of the City due to the Government’s perceived hostility to the financial sector.

Instead, Mr Savouri predicts that London will attract at least 100,000 new financial jobs in the next 10 years, as the growth of the Bric economies – Brazil, Russia, India and China – works in the City’s advantage.

“There are too many aspirational economies that don’t have infrastructures of their own. We have an affinity with India, with the Gulf, even with China – via Hong Kong. These markets will want a western hub,” he said.

Boris Johnson, mayor of London, last week added his voice to the throng warning of a City exodus due to the introduction of a 50pc tax on top earners’ and one-off levy bank bonuses. They mayor suggested that banks could move 9,000 staff out of London in response. Some hedge funds – such as BlueCrest Capital and Brevan Howard – have already relocated staff to Switzerland.

However, Tosca believes that concerns over taxes and regulation are unwarranted. “Taxes are rising and regulation is being tightened elsewhere too.” Mr Savouri told the FT.

His forecasts are modelled in part on the growth of the Japanese banking sector in London over the last 20 years. A similar per capita representation of Bric economies in the capital would create 180,000 new jobs, he said.

http://www.workfromhomeinuk.com/

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/

This year people have certainly picked themselves up off the floor (tricky after that lot) and there was a sense among the luminaries that, even with an election looming, 2010 would see a return to business as usual. As the National Audit Office reported recently, a big reason for that more stable outlook is the £850bn in financial aid that the state has extended to the UK’s banks.

Included in that is the £250bn of guarantees from the Bank of England to finance wholesale borrowing by banks. If there was one message I took away it was that the City expects such aid to be refinanced by the banks in the bond markets next year and that the facilities won’t be rolled over by the Bank. I expect the Old Lady of Threadneedle Street wants to re-impose some market discipline on the banks.

Another reason we’re all still here is the Bank’s £200bn of quantitative easing, a shot in the arm equivalent to negative interest rates of 5pc or more.

That’s certainly driven a financial recovery and helped recoup some of the losses in net wealth the world has seen which stood at an estimated £13 trillion a year ago but have halved again since. It’s also helped boost London’s confidence to underwrite upwards of £50bn in share issues this year which have in turn underpinned many a company’s balance sheet.

But celebrations should be muted. More than 1m people have lost their jobs through no fault of their own in a recession triggered by the City’s irrational exuberance, behaviour with consequences we’ll still be working through in 25 years’ time, according to policymakers. Those were the sobering thoughts the guests were left with as they dispersed into the City’s darkening afternoon.

Damian Reece

http://www.telegraph.co.uk/finance/comment/damianreece/

John Lewis, the department store chain, took more money though its tills last week than in any other week in its history, suggesting that the long-awaited revival in consumer confidence has started.

The retailer said that over the week to last Saturday – December 12 – it saw sales of £110m, the highest figure ever. The figure is 15pc up on the same week last year, and 8pc up on the retailer’s biggest week in 2007.

The fact that sales are up on a two-year basis shows that the performance is not merely a reflection of weak sales last year.

Meanwhile, figures out today from the British Retail Consortium (BRC) show that like-for-like retail sales in central London were 13.3pc higher in November than they were last year.

The monthly growth is the highest since October 2006. The growth is partly down to the weak pound attracting visitors to the capital.

Stephen Robertson, the director-general of the BRC, said: “These are great figures – the best sales growth for three years. Remember that this strong growth is compared with sales falls a year ago, but they show that London retailers have had a very encouraging start to Christmas with even big ticket items doing well.”

“The weak pound continues to make London enormously attractive to overseas visitors and November’s record rainfall brought shoppers in from the suburbs

Andrew Murphy, director of operational development for John Lewis, said: “It is very exciting to be breaking records week after week.”

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/

British workers disillusioned at the imminent 50p tax rate have been crowding into Savills’ seminars on moving to Geneva.

With rooms at up to £8,000 a night, which includes the use of a private butler, the Lanesborough hotel in London is used to high rollers coming through its entrance on Hyde Park Corner.

So it will be business as usual when over 100 of London’s top hedge fund managers and bankers troop through its swing doors this Wednesday evening.

Savills, the high-end estate agent, is holding a Swiss relocation seminar where some of the City’s brightest, best, and richest will be briefed on the advantages of leaving Mayfair and the City behind for Geneva and the Swiss Alps.

The seminar is the second this year. “We had an event in June which was oversubscribed,” says Jeremy Rollason, managing director of Savills Alpine Homes. “This time we have doubled the capacity to 100 and we’re oversubscribed again.”

The reason for the surge in interest about a move out of London is clear, says experts. Labour’s decision to introduce a 50p tax from next April on those earning over £150,000 a year has proved the tipping point for many London-based high earners.

“There was virtual indifference to the UK tax system when people were paying 40pc,” says Mr Rollason. “But when you’re talking about 50pc, all of a sudden HM Revenue & Customs is in for a bit of a surprise. There are high net worth guys out there saying enough is enough.”

Earlier this month it emerged that BlueCrest Capital, the hedge fund, is likely to move part of its operations to Geneva ahead of the introduction of the higher tax rate. Up to 50 of the firm’s hedge fund managers could relocate.

Hugh Osmond, the entrepreneur, has said he is contemplating leaving London, as have celebrities including artist Tracey Emin and sportsman Lewis Hamilton.

Companies from McDonald’s, the fast-food operator, to Informa, the British publisher, are on the move to Switzerland because of onerous corporate tax rates.

Swiss personal tax rates are as low as 20pc and there have been reports of UK-based executives being offered a 10pc tax rate as the government steps up its drive to entice high earners in.

Despite the interest, some experts say talk of an exodus from the City to Switzerland is overdone. Housing supply is limited and rules denoting who is able to buy a property are rigorous. In Geneva, foreigners must gain residency before they buy, which generally requires a contract of employment or proof of sufficient wealth.

Property prices are steep, but pale compared to top-end sites in London. “Equivalent top prices in Geneva are on a par with Kensington rather than Belgravia,” Mr Rollason says. “Top prices in Geneva might be £1,000 per square foot. In London, that could be £3,000-£4,000.”

However, while UK property prices are associated with the boom and bust cycles of the British economy, property in Geneva has maintained its value despite the downturn. Over the last five years, capital appreciation has run at 5pc-7pc a year, according to Savills, although it has plateaued this year.

Like residential property, commercial sites are also in high demand and get snapped up very quickly, says one agent. “The big banks snap up the bigger new-build sites almost instantly. That’s a consideration if you’re a hedge fund thinking of moving over there.”

http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/

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