Jeremy Corbyn’s left-wing Labour Party gaining political power in the U.K. is a serious threat to the country’s super-rich, according to a senior executive at one of Switzerland’s oldest private banks.
“Corbyn is very dangerous for big fortunes,” said Heinrich Adami, who oversees Banque Pictet & Cie’s U.K. operations. Some of Pictet’s non-U.K. clients in the country already have a “Plan B” in place for moving to jurisdictions including Monaco, Italy and Portugal, he said Tuesday at a London event held by the 213-year-old firm. A Corbyn government "is one of the main issues our clients are losing sleep over.”
Contingency planning among the U.K.’s wealthiest individuals and families has stepped up since Corbyn’s party won its biggest share of votes since 2001 in last year’s general election. Labour’s manifesto has turned its anti-wealth rhetoric into prospective policies that include possible wealth taxes. The next election is scheduled for 2022, though Prime Minister Theresa May could call for an earlier vote.
Adami, 59, is one of Pictet’s 37 equity partners. His comments mark a rare insight into the private banking world’s view of the U.K.’s political landscape. Seven owner-managers ultimately control Geneva-based Pictet, including Boris Collardi, the former chief executive officer of rival Julius Baer Group Ltd. Pictet managed assets totaling 509 billion francs ($505 billion) at year-end.
‘Borrowed Time’
With so much uncertainty surrounding Corbyn’s plans for the wealthy, the U.K.’s top 1 percent is now more concerned about him than the fall-out of the country’s exit from the European Union, according to some lawyers and tax advisers.
During his party’s annual conference last month, Corbyn said the U.K.’s richest are on “borrowed time.” He struck a similar tone Monday in response to the 2018 budget, accusing May’s governing Conservative Party of wasting money with tax cuts for the wealthiest.
Some wealthy British citizens are already eyeing the exit. Jim Ratcliffe, 66, founder of global chemicals manufacturer Ineos AG and the U.K.’s richest person, is considering moving to Monaco along with two other billionaire Ineos directors, a British newspaper reported in August. The city-state is already home to British natives such as Philip Green, whose family owns the U.K.’s largest closely held clothing company, Formula One racing driver Lewis Hamilton and cyclist Chris Froome.
Spain, Portugal
Other popular destinations include the U.K.’s nearby crown dependencies of Jersey and Guernsey, which don’t apply capital gains or inheritance taxes. Spain and Portugal, meanwhile, offer a flat tax rate on income earned in their jurisdiction, drawing over 10,000 foreigners so far to the Iberian Peninsula. Israel and Italy have also increased in popularity since introducing 10-year “tax holidays.”
Adami’s comments echo those of other professionals in the U.K.’s wealth community. The threat of a Labour government has forced families to “consider their near-term options" for tax planning and protecting their finances, said Belinda Aspinall, Northern Trust Corp.’s head of global family offices for EMEA.
At Pictet’s annual Private Banking Dinner, Adami was unconcerned about the U.K.’s planned departure from the EU. He listed 10 reasons why the U.K. will remain a global wealth hub, ranging from its high density of family offices to the quality of schools that wealthy families can send their children.
“Do you really think this will end because of Brexit?" he asked. “I don’t think so.”
This article was provided by Bloomberg News.
