London and the UK’s leading status in the global financial system is “fragile”, the boss of Goldman Sachs has warned, as the government grapples with a tough economy.
Speaking ahead of a meeting with the prime minister, David Solomon – chairman and chief executive of the huge US investment bank – told Sky News presenter Wilfred Frost’s The Master Investor Podcast of several concerns related to tax and regulation.
He urged the government not to push people and business away through poor policy that would damage its primary aim of securing improved economic growth, arguing that European rivals were currently proving more attractive.
He said: “The financial industry is still driven by talent and capital formation. And those things are much more mobile than they were 25 years ago.
“London continues to be an important financial centre. But because of Brexit, because of the way the world’s evolving, the talent that was more centred here is more mobile.
“We as a firm have many more people on the continent. Policy matters, incentives matter.
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“I’m encouraged by some of what the current government is talking about in terms of supporting business and trying to support a more growth oriented agenda.
“But if you don’t set a policy that keeps talent here, that encourages capital formation here, I think over time you risk that.”
He had a stark warning about the recent reversal of the “Non Dom” tax policy, which occurred across both the prior Conservative government and the current Labour government, which has played a part in some senior Goldman partners relocating away from London.
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1:16
Chancellor will not be drawn on wealth tax
Richard Gnodde, one of the bank’s vice-chairs, left for Milan earlier this year.
“Incentives matter if you create tax policy or incentives that push people away, you harm your economy,” Mr Solomon continued.
“If you go back, you know, ten years ago, I think we probably had 80 people in Paris. You know, we have 400 people in Paris now… And so in Goldman Sachs today, if you’re in Europe, you can live in London, you can live in Paris, you can live in Germany, in Frankfurt or Munich, you can live in Italy, you can live in Switzerland.
“And we’ve got, you know, real offices. You just have to recognise talent is more mobile.”
Goldman is understood to have about 6,000 employees in the UK.
Rachel Reeves is currently seeking ways to fill a black hole in the public finances and has refused to rule out wealth taxes at the next budget.
Mr Solomon expressed sympathy for her as her tears in parliament earlier this month led to speculation about the pressure of the job.
“I have sympathy, I have empathy not just for the chancellor, but for anyone who’s serving in one of these governments,” he said, referring to the turbulent political landscape globally.
Commenting on the chancellor’s Mansion House speech last week, he added: “The chancellor spoke here about regulation, she’s talking about regulation not just for safety and soundness, but also for growth.
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1:54
Takeaways from chancellor’s Mansion House speech
“And now we have to see the action steps that actually follow through and encourage that.”
One area he was particularly keen to see follow through from her Mansion House speech was ringfencing – the post financial crisis regulation that requires banks to separate their retail activities from their investment banking activities.
“It’s a place where the UK is an outlier, and by being an outlier, it prevents capital formation and growth.
“What’s the justification for being an outlier? Why is this so difficult to change? It’s hard to make a substantive policy argument that this is like a great policy for the UK. So why is it so hard to change?”
Labour’s deputy leadership contest is on the brink of becoming a two-horse race between Bridget Phillipson and Lucy Powell, as the other three candidates scramble for nominations.
The official tally from the Parliamentary Labour Party (PLP) on Wednesday night put Ms Phillipson, the education secretary, ahead with 116 nominations.
Ms Powell, the former Commons leader who was ousted in Sir Keir Starmer’s reshuffle last week, is behind with 77 – just three shy of the 80 needed to make it to the next round.
Bell Ribeiro-Addy, Paula Barker and Dame Emily Thornberry all had support from 15 or fewer MPs as of Wednesday evening, fuelling speculation they could follow in the footsteps of housing minister Alison McGovern and pull out.
Ms Barker, the MP for Liverpool Wavetree, told Sky News she was “genuinely undecided” and had a lot to consider.
Image: Education Secretary Bridget Phillipson kept her job in the recent reshuffle. Pic: PA
Ms Barker, a former trade union official, has challenged the government on Gaza and welfare cuts and is part of the newly formed soft-left “Mainstream group”.
Her allies are keen for her to stay in the race, with one telling Sky News she “outshone the others by miles” during an online hustings event for MPs, and would be a “real alternative for the membership”.
Her supporters are expected to throw their weight behind Ms Powell if she does drop out, with one saying of the Manchester Central MP: “She is closer to Andy Burnham, and she was just sacked, so those who dislike Morgan McSweeney [the prime minister’s chief of staff] I guess will get behind her.”
However, while describing her as “slightly more left” than Ms Phillipson, they said she is “hardly a socialist”.
Image: Lucy Powell was sacked as leader of the Commons last week. Pic: PA
Some MPs want to avoid a race between Ms Powell and Ms Phillipson, believing there is not much difference in what they offer, but others had more praise for the former, calling her performance at the hustings impressive.
One MP said: “Her pitch is that she’s been the shop steward of the parliamentary Labour Party (PLP) in government, but now she’s not in government she can dedicate herself to the role of deputy leader full time without a department to run. She wants to focus on defining our voter coalition and making sure we’re speaking to them.”
They added that Ms Phillipson might be too busy to fulfil the deputy leadership role, especially with SEND (special educational needs and disabilities) reform coming down the track “which could be a horror show”.
Ms Phillipson has been making the case to MPs about her experience fighting populism in her Houghton & Sunderland South seat in the North East, where Reform UK is on the rise.
Dr Jeevun Sandher said he was won over by the education secretary following her pitch at the hustings in which she also spoke about the cost of living crisis.
The MP for Loughborough told Sky News: “Bridget was strong, articulate, and very impressive. She was able to communicate the deep thought we need to govern well and win the next election.”
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2:07
What do unions want from Labour’s new deputy?
The deputy leadership race was triggered by the resignation of former deputy prime minister and housing secretary Angela Rayner after she admitted underpaying stamp duty on a flat.
The candidates need 80 backers by 5pm Thursday. As of Wednesday evening’s tally, 235 MPs had made their nominations out of Labour’s 398 MPs.
Ms McGovern pulled out on Wednesday afternoon, saying it was “clear that the momentum of this contest had shifted, and I am not going to progress to the next stage”.
The MP for Birkenhead was rumoured to be Number 10’s preference before it was clear Ms Phillipson – who she has since nominated – would enter the race.
Timeline for the race
Many Labour MPs are keen to see someone who would work constructively with the prime minister to avoid the party becoming more divided.
There are also calls for the deputy leader to be from the north to balance out the number of cabinet ministers who represent London seats – which both Dame Emily and Ms Riberio-Addy do.
If more than one candidate secures 80 nominations by Thursday evening, they will then need to gain backing from either three of Labour’s affiliate organisations, including two trade unions, or 5% of constituency parties.
That process will continue until 27 September, meaning a contested election threatens to overshadow the party’s annual conference that begins in Liverpool the next day.
The successful candidates will then appear on the ballot for a vote of all party members and affiliated party supporters, which will open on 8 October and close on 23 October at 12pm.
The winner will be announced on Saturday 25 October.
Labour’s deputy leadership contest is on the brink of becoming a two-horse race between Bridget Phillipson and Lucy Powell, as the other three candidates scramble for nominations.
The official tally from the Parliamentary Labour Party (PLP) on Wednesday night put Ms Phillipson, the education secretary, ahead with 116 nominations.
Ms Powell, the former Commons leader who was ousted in Sir Keir Starmer’s reshuffle last week, is behind with 77 – just three shy of the 80 needed to make it to the next round.
Bell Ribeiro-Addy, Paula Barker and Dame Emily Thornberry all had support from 15 or fewer MPs as of Wednesday evening, fuelling speculation they could follow in the footsteps of housing minister Alison McGovern and pull out.
Ms Barker, the MP for Liverpool Wavetree, told Sky News she was “genuinely undecided” and had a lot to consider.
Image: Education Secretary Bridget Phillipson kept her job in the recent reshuffle. Pic: PA
Ms Barker, a former trade union official, has challenged the government on Gaza and welfare cuts and is part of the newly formed soft-left “Mainstream group”.
Her allies are keen for her to stay in the race, with one telling Sky News she “outshone the others by miles” during an online hustings event for MPs, and would be a “real alternative for the membership”.
Her supporters are expected to throw their weight behind Ms Powell if she does drop out, with one saying of the Manchester Central MP: “She is closer to Andy Burnham, and she was just sacked, so those who dislike Morgan McSweeney [the prime minister’s chief of staff] I guess will get behind her.”
However, while describing her as “slightly more left” than Ms Phillipson, they said she is “hardly a socialist”.
Image: Lucy Powell was sacked as leader of the Commons last week. Pic: PA
Some MPs want to avoid a race between Ms Powell and Ms Phillipson, believing there is not much difference in what they offer, but others had more praise for the former, calling her performance at the hustings impressive.
One MP said: “Her pitch is that she’s been the shop steward of the parliamentary Labour Party (PLP) in government, but now she’s not in government she can dedicate herself to the role of deputy leader full time without a department to run. She wants to focus on defining our voter coalition and making sure we’re speaking to them.”
They added that Ms Phillipson might be too busy to fulfil the deputy leadership role, especially with SEND (special educational needs and disabilities) reform coming down the track “which could be a horror show”.
Ms Phillipson has been making the case to MPs about her experience fighting populism in her Houghton & Sunderland South seat in the North East, where Reform UK is on the rise.
Dr Jeevun Sandher said he was won over by the education secretary following her pitch at the hustings in which she also spoke about the cost of living crisis.
The MP for Loughborough told Sky News: “Bridget was strong, articulate, and very impressive. She was able to communicate the deep thought we need to govern well and win the next election.”
Please use Chrome browser for a more accessible video player
2:07
What do unions want from Labour’s new deputy?
The deputy leadership race was triggered by the resignation of former deputy prime minister and housing secretary Angela Rayner after she admitted underpaying stamp duty on a flat.
The candidates need 80 backers by 5pm Thursday. As of Wednesday evening’s tally, 235 MPs had made their nominations out of Labour’s 398 MPs.
Ms McGovern pulled out on Wednesday afternoon, saying it was “clear that the momentum of this contest had shifted, and I am not going to progress to the next stage”.
The MP for Birkenhead was rumoured to be Number 10’s preference before it was clear Ms Phillipson – who she has since nominated – would enter the race.
Timeline for the race
Many Labour MPs are keen to see someone who would work constructively with the prime minister to avoid the party becoming more divided.
There are also calls for the deputy leader to be from the north to balance out the number of cabinet ministers who represent London seats – which both Dame Emily and Ms Riberio-Addy do.
If more than one candidate secures 80 nominations by Thursday evening, they will then need to gain backing from either three of Labour’s affiliate organisations, including two trade unions, or 5% of constituency parties.
That process will continue until 27 September, meaning a contested election threatens to overshadow the party’s annual conference that begins in Liverpool the next day.
The successful candidates will then appear on the ballot for a vote of all party members and affiliated party supporters, which will open on 8 October and close on 23 October at 12pm.
The winner will be announced on Saturday 25 October.
I ask Ross, 27, if the flying of the flags is timed to coincide with concerns about immigration.
“Yes,” he replies. “My personal stance on it is, yes, this is us saying ‘you’re in our country’, right?
“This is what we stand for, you bow to this flag how we do, right, and you shouldn’t be doing illegal things, and for example, raping the women and committing crimes, which we don’t agree with.”
Image: Ross says there’s nothing wrong with being patriotic
He tells me some of the handful of people he’s with went to the same school as him. But Octavia, the only woman in their group, only met them recently.
“She bumped into us the other day, and now she’s a full-fledged flagger,” Ross says.
Octavia, 27, lifts her jumper to reveal she’s wearing an England flag dress.
“I saw him putting up the flags and I genuinely wondered why,” she says.
“He kind of explained to me, like, we’re protecting people of Britain, we are spreading awareness, that is literally all, and I was really happy to get involved”.
Image: Octavia says she was happy to get involved
As the next flag is being put up, a man walks past and breaks into song.
“No surrender, no surrender, no surrender to the boats coming over,” he sings.
Ross, filming him, thanks him for his “performance”.
Many opinions but few solutions for debate that crosses dividing lines
Over the course of an evening in Lichfield, we struggled to find anyone who didn’t have an opinion on the flags appearing around the town.
Yet we did find people who were reticent to speak on camera, particularly those opposed to the flags being there.
This is a town where around 93% of residents were born in England, according to the census in 2021.
Unlike many British towns and cities, there is little visible evidence of the mass migration this country has experienced in recent decades.
Octavia, the newest recruit to the group of “flaggers” we met, grew up in Leicester, where just under 58% of people were born in England.
After meeting people opposed to the flags in Lichfield, she told me “they’re wealthy, they live in a nice area, they don’t actually have to go through the struggles that everybody else does”.
She then revealed her opposition to migrant hotels is in part because she was once at risk of homelessness and didn’t get state support.
But from what we saw, it would be wrong to conclude that there are obvious dividing lines in this debate.
On both sides, there were people from a range of different backgrounds, young and old.
Some see a display of pure patriotism. To others, it’s blatant nationalism that has to stop.
But in these uneasy times, the removal of any flags has been seized on as a political act that has sparked anger in communities.
A woman sees it all happen and tells us her husband has written to the council to ask for the flags to be removed.
She’s unhappy about how it may make the town feel for some people.
But she doesn’t want to go on camera – or even have her words recorded.
Image: Bob says the number of flags going up has become ‘extreme’
I ask Ross about his political views.
He says he doesn’t belong to any party, but he tells me he supports Tommy Robinson – and had been with him the previous evening.
He got the flags they’re putting up from him.
Further down the street, we meet Bob. He’s just out for dinner. We get talking about the flags.
“It’s not a racist thing just to be wanting to look after your people,” Ross tells him.
Bob agrees, but is concerned about why flags are going up now.
“There’s nothing wrong with showing the English flag,” her husband agrees.
It’s hard to find anyone who doesn’t have a view on the flags appearing around the town. We leave Lichfield with a sense that they’re provoking strong feelings on both sides of a very live national debate.