Labour is still “ambivalent” towards the City and neither of the major parties has done enough to “celebrate” its achievements, according to the UK chief of Federated Hermes.
Saker Nusseibeh, who leads the UK arm of the $778bn (£613bn) American fund manager, said the narrative towards UK financial services was not “negative” but both sides should be focusing on how to fuel its growth and “double” the £100bn tax revenue it injects into the Treasury’s coffers.
“[Labour] have gone out of their way to say that they’re not there to try to increase the tax of people who make money through employment. The one point that they made about private equity is one that people on both sides of the political divide have made before, so that’s not an attack,” Nusseibeh told the Following the Rules podcast.
“So that is a very positive start. But where that takes Labour is to where the Conservatives are, which is the narrative is not antagonistic, but it’s not supportive.
“It’s neither. It’s ambivalent. That’s different from celebrating. And we have to learn to celebrate as a country, our achievements.”
Nusseibeh, who joined the fund house as its chief investment officer in 2009, said UK financial services were an “extraordinary engine of wealth creation” that should be treated as a tool to “grow the country”.
The comments suggest there is still some doubt toward Rachel Reeves and Keir Starmers’ party after a push to woo the Square Mile and repair ties following the leadership of Jeremy Corbyn.
Reeves has spearheaded a “smoked salmon and scrambled eggs offensive” on business over the past two years, so-called due to a slew of breakfast summits with the Square Mile’s top executives.
The sector has become a battleground between the two parties, with Labour looking to assuage concerns that it will mount a tax raid on financial services to fund its spending plans.
In its manifesto launch last week, Starmer doubled down on a commitment that he would not hike corporation tax if elected to power.
However, fears have been growing that the party could lift the capital gains rate, a move that some have warned would be the “death of entrepreneurship and the City.” Labour has said only that it has “no plans” to hike the rate.
Private equity dealmakers have also been unsettled by a move to lift the tax rate on carried interest, the profits they make on the sale of assets, which would bring it in line with the higher rate of income tax.
However, the party said earlier this year it would “unashamedly champion” financial services in government as it launched plans to slim down regulation and cut “redundant” rules that are hamstringing growth.
Rachel Reeves and Mayor Sadiq Khan said in a joint article for City A.M. that the industry “generates billions of pounds of wealth for our nation” and “when the sector succeeds, we all succeed”.
“The UK is a world-leader in financial services – something we should be proud of and continue to champion,” they wrote.