New York woos Barclays - as UK economic woes mount

Amid talk that Barclays should relocate to NYC, more dismal economic news reminds us that this is a bad time to be losing our biggest companies...

by James Taylor
Last Updated: 19 Aug 2013
Should Barclays relocate its HQ from London to New York? That's the view of analysts at UBS - and it's an idea that was warmly welcomed by New York Mayor Michael Bloomberg, who said it would be 'great for us' if it did. Barclays itself is keeping mum on the subject. But given the banking levy and the likely increase in its regulatory burden, you couldn't blame the bank's top brass for pondering their options. And with the UK economy in a rather delicate state - as evidenced by the latest gloomy news on mortgage defaults and high street sales - the loss of a big employer like this is the last thing we need…

Banks aren't exactly popular here in the UK at the moment, of course. Politicians and the mainstream press don't have a good word to say about them (in fact, we imagine most bankers are pretending to be lawyers or traffic wardens when they meet people at dinner parties). The Chancellor is keen to pocket an ever-bigger slice of their profits via his banking levy. And then there's the growing threat of an increased regulatory burden: the Independent Commission on Banking is due to publish its interim report on April 11, and rumour has it that some fairly radical reforms are under consideration - including forcing banks to capitalise their retail and investment banking arms separately. This would be an expensive and time-consuming business.

So as such, it's hardly surprising that some analysts think they'd be better off elsewhere. UBS points out that whereas Barclays has to compete for staff internationally, local regulators are now dictating its returns to shareholders. If that continues, it suggests, 'Barclays has little option but to consider shifting domicile.' And it sounds like Bloomberg and New York will be happy to have them. Equally, if HSBC decides to relocate too (and chairman Douglas Flint has been grumbling loudly about the planned reforms), it will no doubt enjoy a warm welcome in the Far East.

Some will undoubtedly say good riddance. But the UK economy clearly needs all the help it can get at the moment; figures out today showed that mortgage defaults have seen an unexpected rise, while more small businesses are falling behind on their loan repayments. Both Mothercare and Laura Ashley have underlined the high street gloom today, reporting like-for-like sales falls of 2.4% and 4.2% respectively. And according to GfK NOP's latest consumer confidence survey, sentiment barely recovered in February after its January slump.

So however much we want to bash the banks for their excesses (and it's worth remembering that we'd still be left with the ones who had to go cap in hand to the Treasury), surely it's a bad time to be losing world-class businesses that employ thousands of people?

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