As Brexit lurches erratically towards March 29th, UK financial services professionals are starting to apprehend a new disruptor in the mists. - Jeremy Corbyn, the self-styled bankers' worst nightmare. If all goes to (Jeremy's plan), he will be British prime minister sometime in 2019.
For a profession that's supposed to be obsessed with contemporary events, some people in finance are surprisingly ambivalent about Corbyn's preparations for entering stage left. We spoke to quants and risk professionals who were hard at work in their own niches and unbothered about politics. One headhunter said the senior bankers he speaks to are mostly interested in Brexit: "It's all they talk about now. This is such a crucial time. People don't have the bandwith for Corbyn as well."
Some finance professionals, however, are starting to sound the alarm. Two weeks ago, Alasdair Haynes, the chairman of Aquis Exchange, a London-based equities trading firm, described the potential combination of a hard Brexit and a Corbyn government as, "Armageddon." Steve Eisman, the money manager who predicted the collapse of subprime mortgages before the financial crisis, told Bloomberg earlier this month that, “Corbyn’s a Trotskyite...Now I know my Trotskyites well, and I know you don’t want to be invested in the U.K. if a Trotskyite is prime minister."
The potential for a Corbyn government is also percolating down to front office bankers in sales and trading and corporate finance roles, many of whom are young non-Britons who have built lives and careers in the UK. Some are looking at the future with increasing trepidation.
"I love the UK," says one senior German saleswoman at a European bank in London. "But Corbyn is trying to turn a successful capitalist country which has its heartbeat in the finance industry into a socialist country where you are punished for being successful and being a banker. If he is elected, this country will have nothing to offer me and I will be first to put my hand up to leave. It's so painful to see what's happening."
This is the sort of sentiment that matters because many of the revenue-generating employees working in financial services in the UK are non-Britons. Just 54% of the people in our CV database who work in trading and M&A jobs in London speak English as their first language.
Taxes - and fear of them - are part of the issue. Corbyn and his chancellor, John McDonnell, have stated their intention to tax incomes above £80k at 45%, and incomes above £125k at 50%. This may not seem much compared to the UK's 83% marginal tax rate in 1973 or the 75% marginal rate proposed by Francois Holland in France in 2013, but the worry is of more radical policies to come. McDonnell previously proposed a 60% top tax rate, called for "people's quantitative easing." In 2012 he promised to, "bring a halt to the frenetic, madcap speculation in the City," and to impose capital controls "if the City resists." During the 2008 financial crisis, McDonnell blogged that repossessed private homes should be acquired by the state and "converted to social rentals."
"I am happy to pay taxes and to support those in need and I have always done so," says a managing director and trader at a major U.S. bank in London. "But Corbyn's policies would potentially go far beyond this. - I feel that he is deliberately targeting people like me, and the sector that I work in."
An Italian partner at a private equity fund in London says people in his circle are discussing Corbyn and that "everyone is worried." - "Brexit is already a mess, and then you have this man who is totally against finance," he says. "If he is elected, most people who can leave will do so."
Contrary to popular opinion, however, most people in finance can't emigrate simply because they're piqued. - The UK is still Europe's biggest financial centre; it is still where the best jobs are. Several of those we spoke to said they would have to keep their heads down under a Corbyn government until alternatives became available elsewhere. Many also observed that Brexit will facilitate the movement of jobs overseas.
If Corbyn and McDonnell's socialism are an issue for London bankers, some members of the international community working in the City have also been eyeing Corbyn's foreign policy with dismay. "The antisemitism displayed regularly by Corbyn and his supporters concern me more than the consequences of his policies for my job or wealth," says a French MD at a U.S. bank. "This will be bad news. - He's an extremist and way too antisemitic," says a French trader.
Like much of the UK population, London bankers are stuck between a rock and a hard place. However much they dislike Corbyn, many people in the City are equally aghast at the recent actions of the Conservative Party. One MD in trading said the Conservatives have put their own interest before that of the country. A French associate in M&A, said the Tories' "flirtation with populism" had "driven this country into a wall." For this reason, he said a socialist government under Corbyn is a necessary corrective: "I don't see a poorer middle class and a wealthier first percentile as a sustainable solution. People in my situation should contribute.
"I would only hope that Corbyn would do something to curb housing costs in London, which are frankly out of whack with reality even for myself," he added. "I would not be opposed to higher taxes if I were paying lower rent and lower school fees."
Few of the international finance professionals we spoke to matched the stereotypical, "citizens of nowhere" maligned by Theresa May - loyal only to themselves and concerned primarily with maximizing their own after tax income. Instead, many expressed affection for the UK and an interest in tackling the country's broader social ills. They just didn't want to do so by attacking the City of London.
Whether Jeremy Corbyn becomes prime minister or not, international bankers in the City will have a role in trying to create a more cohesive society. A senior German banker who's settled in the U.K. after a long career at a top U.S. investment bank, said too few of his European counterparts understand the country they have settled in. "I know people who have lived in London for 20+ years and who have never crossed the M25. When they talk about taking the train for the weekend, they mean KX to Paris."
Young Europeans in London would have more understanding of and empathy for Brexit and Corbyn voters if they left London and traveled north or south west, he suggests. In the meantime, he says there are plenty of young traders who themselves support Corbyn because they, "don't understand his policies," and, "don't think they're in the top 5%." A Corbyn government is a near certainty, he adds. It's also necessary: "This is the only way that people will learn again how damaging socialism can be."
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