Britons need banking and bankers, like it or not

We're a little late on this, but this is a good account of why the British public and the British government are foolish to bash the financial services industry

What follows is a summarised version of an article which appeared on the little known (at least to us) financial services club blog in January. As ever with these things, we've highlighted the most interesting parts....

'The Financial Times has discovered that many City banks and bankers are thinking about upping sticks...

So what does this mean in reality?

The reality is that the UK cannot unilaterally restrict bank bonuses without losing significant tax and income across the UK.

First, if 9,000 bankers leave then that is 9,000 x (salary + bonus). In reality therefore, if each banker earns an average of 2 million or so all up, it's a loss of about 20 billion to the UK economy and taxation of around 5 billion or more.

That's a serious amount of income to the Treasury and commerce across Britain, and London in particular, that disappears up the spout.

But it's more fundamental than this.

If 9,000 bankers leave London, then it is also 9,000 x 4 jobs.

Each banker supports an infrastructure across London of accountants, lawyers, cleaning staff, receptionists, security guards, catering, bars, restaurants and more. All of the support and infrastructure that services their offices and complex negotiations in other words.

So it's more like 36,000 job losses rather than 9,000.

OK, the other 27,000 aren't necessarily earning 2 million a year, but let's say they average 20,000 per year, the UK's average median salary (not London, UK).

This would mean a loss of a further 540 million in income, 100 million plus in taxation and a further 27,000 or more on the unemployed and social security benefit numbers.

Following on from this, wherever the bankers move to will also become a major financial centre and hence other firms might follow paving the way for a mass exodus, in worst case scenario.

In best case scenario, it would just mean that London loses its shine as a Financial Centre, which is threatened already. For example, HSBC has made moves for their CEO to relocate to Hong Kong and is listing on the Shanghai Exchange over the past few months, and many report that Shanghai will outshine London by 2019....

The UK banking sector contributes significantly to the UK and its economy:

* Employing almost half a million people with the wider financial industry employing over 1.1 million

* Together with related activities (accountancy, business, computer and legal services, etc), some three million people rely on the financial industry for their jobs.

* Banks and financial services contribute 70 billion to the UK's national output (6.8% of GDP)

* Banks and financial services provide 25% of total corporation tax (8 billion) to the UK Government

* The value of foreign exchange business passed through London every day is 560bn ($1 trillion)

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