Back in 2010, with the pain of the global financial crisis still fresh, the Labour government of then-British Prime Minister Gordon Brown proposed raising the country’s top income tax rate to 50 percent as part of its effort to quell public fury over the bankers’ complicity in the global financial crisis. Working London myself at the time, I made a bet with a good friend—a fierce Labour Party supporter—that the move would lead the country’s financial services giants to make good on their threats to leave the United Kingdom for places like Ireland or Luxembourg.
I lost the bet. Leaving the city turned out to be a banker’s bluff, one the United Kingdom’s financial sector rolled out every time regulators threatened new strictures or governments mulled higher taxes. In fact, despite the top income tax rising to 50 percent in 2010 and staying there until 2013. London held its place as Europe’s most important financial hub. Very few London jobs decamped to cities furiously trying to woo bankers to cross the water, including to Amsterdam, Dublin, Paris, and Frankfurt. Nor did any of the hundreds of foreign financial institutions that have traditionally sited their regional operations in London choose to leave.
