Brevan Howard, one of London’s biggest hedge fund managers, is reportedly considering a relocation of its headquarters abroad.
Brevan Howard, one of London’s biggest hedge fund managers, is reportedly considering a relocation of its headquarters abroad. Apparently, the investment house, which manages USD22bn in hedge fund assets and employs 250 people in London, has told the Financial Services Authority that ambiguity over taxation as well as the Treasury’s crackdown on non-domiciled individuals has caused much unease among its managers.
This must be one of the bigger warning signs to authorities that London, a favoured hub for multinationals and the world’s leading international financial services centre, is in danger of losing its edge. And while the UK keeps tinkering with its tax system in ways that make it less attractive to the financial industry, competing jurisdictions such as Switzerland, Jersey and Guernsey are putting out the welcome mat to alternative fund managers.
The loss of hedge fund managers would be an appreciable blow to the country’s revenues, but this is not just about tax take. When a sophisticated investment house moves away from London, it also takes with it other, less quantifiable but perhaps more important elements such as skills, experience and reputation.
Word has it many other hedge fund managers are also reassessing the environment in London. Suppose alternative managers decided move out in droves? They certainly can, because they have very mobile operations. How will the city combat the loss of skills, revenues and reputation?
The credit crunch already presents a major problem for London. But take away its talent and reputation as a friendly jurisdiction to high-achieving individuals and businesses, and the UK will be in a bigger mess. Those responsible for the financial services sector at government level must treat Brevan Howard’s disquiet as a harbinger of things to come and act decisively – before it is too late.
