The Guardian's G2 section has a long and illuminating feature by James Meek on the super rich: how Britain became a magnet for the world's super-rich.
It has exclusive shops, fabulously luxurious homes and a glamorous cultural scene, but this is not what has made London the destination of choice for the world's multi-billionaires. For the ultra-rich few, this country is now a virtual tax haven, which is why more and more princes, tycoons andoligarchs are making it their home. James Meek sets out to uncover the secrets of Britain's seriously wealthy.
Of course, this has both pros and cons. It has certainly created work for wealth managers, private banks and the rest of the City; helped sustain swanky hotels and restaurants; and created a ready market for luxury goods providers. You can get virtually anything in London if you have the money.
But if recent research on the comparison effects of income is valid, this abundance of super rich might be making other Londoners less happy. As yet another stretch limo cruises by, we must bear the pain of feeling like (relative) paupers for the greater economic good of the nation...
The article itself contains some interesting quotes. Here's an extract:
If there is more private wealth in Britain, and in London in particular, than ever before, where is it coming from? One explanation is that in the past few years London has become, even more than in the 1990s, the world's conduit of choice for private wealth. Its generous tax treatment of the mega-rich, particularly those born abroad, makes it in some ways a virtual tax haven.
The old snobberies of race and class have partly yielded to new snobberies of money and beauty. That, and its combination of attractions - political stability, relatively honest officials, a host of ingenious tax-avoidance specialists, an army of cheap immigrant labour, the luxury shops, restaurants and clubs that charge prices high enough to reassure the wealthy that they are special, the resident celebrities, the cultural energy, the existence of a vast City within the city dedicated to money - mean only New York is London's peer. And there, despite the Bush administration's income tax cuts that have gone disproportionately to the very wealthy, the US Inland Revenue Service and Wall Street regulators have a reputation for being fastidious with the rules.
"The IRS is perceived to be a much more burdensome tax regulator than the UK Revenue," says David Harvey. "The UK tax authorities take the approach that it's much better to fight over a small piece of a very large cake."
Seb Dovey, of the London-based wealth management consultancy Scorpio Partnership, says: "I wouldn't say as a professional centre for private banking London overtakes Switzerland, but it does punch higher than any of the other European countries ... if you're an emerging rich person or a multi-billionaire, London is the place to be. Those from the Middle East and India would use Switzerland as a bank-deposit location, and their active money in play would be managed out of the UK."
"I think the super-rich want to have two homes, one in New York and one in London," says a British hedge fund manager. "The bulk of the super-rich want to spend their lives in these two cities, but if they're based in New York, they would pay a lot more tax than here."
Comments