Britain’s financial services sector is booming, as everyone knows. It generates jobs, provides vast amounts of tax revenue, contributes a surplus of nearly £20bn to the trade balance and helps make London one of the most vibrant, cosmopolitan cities in the world.
But the runaway success of the City also means that Britain is increasingly dependent on a largely foreign-owned sector, that London is experiencing explosive house price growth, and that income inequality is on the rise, despite this government’s redistributive measures.
There seems to be something in the air. In recent months we have seen the usually secretive heads of private equity firms given a rough ride in the Commons, papers like the Telegraph and the Mail issuing objections to the tax privileges granted to the super-rich, and increasing calls for a rise in capital gains tax. In the new issue of Prospect, editor David Goodhart and economic consultant Harvey Cole explain why the super-rich pay so little tax, and explore some of the options for squeezing more out of them without frightening them away from Britain.