It is richly ironic that Goldman Sachs is now reported to be reviewing whether to relocate some of its spectacularly successful money making operation out of the UK to more conducive climes. The current Government’s tax and regulatory policies are identified as the trigger for this potential move. The prospect of handing over piles of cash to the UK Treasury to meet spiralling tax demands is clearly sticking in the collective Goldman gullet.
Yet Goldman Sachs has been one of the staunchest supporters of New Labour. The bank’s Mancunian chief economist, Jim O’Neill, responsible for coining the term BRICs, is a close friend and informal adviser to Gordon Brown, while the bank’s former chief UK economist, Gavyn Davis, amassed most of his considerable fortune when working for Goldman. Davis’s wife Sue Nye, was Gordon Brown’s diary secretary and continues as a special adviser and Director of Government Relations. The bank’s chairman, Peter Sutherland, is one of the most prominent advocates for the euro.
Last year Goldman Sachs paid £1.1 bn in UK corporation tax. It topped the league as the highest City contributor to the Exchequer. The bank’s 5,500 UK employees pay millions in income tax. Indeed, some of them pay well over a million each. The prospect of making an even higher contribution has caused some of them to form a queue asking the bank to relocate them to friendlier jurisdictions.
As 2010 unfolds one of the key themes we are likely to witness is the flight of well-heeled City folk to countries where the taxman does not grab the major slice of their income. Peter Sutherland’s previous appointment as a member of the Hong Kong Chief Executive’s Council of international Advisers may prove highly relevant as his employees line up to leave to more hospitable financial centres.