Over canapés of beef and stilton pie, bone marrow gravy and mushy peas, the financiers at JP Morgan’s New York headquarters held their champagne flutes aloft for a toast: “His majesty the king.”
Just days before Rachel Reeves’s budget – amid the chancellor’s efforts to soothe business fears and bond market jitters – Jamie Dimon, the Wall Street banking company’s boss, was hosting a birthday celebration for King Charles at its new $3bn (£2.3bn) Manhattan headquarters.
Despite the union jack emblazoned on the skyscraper, the king was not there. Varun Chandra, the prime minister’s envoy, however, was among the 400 guests. Dispatched, according to the Financial Times, to reassure the JP Morgan boss of Labour’s pro-business stance.
This week – hours after banks were spared a tax rise in Reeves’s £26bn budget – Dimon unveiled plans to build a 279,000 sq metre (3m sq ft) tower in the Canary Wharf district of London, with a caveat that a “continuing positive business environment in the UK” was required.
It is understood that planning issues and long-term considerations are more important for the bank than any one budget. But the episode still highlights how financial services has won a prized status in government, amid ferocious City lobbying to ensure it was one of the few off-limits sectors in Reeves’s smorgasbord tax-raising budget.
For months Labour has been rolling out the red carpet for Wall Street and City financiers, amid a far broader campaign to woo bankers and company bosses after the party’s pre-election love-in with industry turned sour.
Norman Blackwell, the former chair of Lloyds Banking Group, who also advised Margaret Thatcher on policy in the 1980s, said Reeves had “work to do” to rebuild the confidence of the City after her £40bn tax-raising 2024 budget.
“Before the election they talked as though they would be a party that would recognise the importance of wealth creation in the economy by business and entrepreneurs. Everything they have done in government has gone in the opposite direction,” he said.
“They have increased taxes on business, increased regulation in the labour market, [and] the threat to high earners and non-doms. If you look at the numbers of entrepreneurs and rich people leaving the country – they have convinced people that they do not value and will not support entrepreneurs.”
Despite the reprieve for banks, Blackwell said the budget was still unlikely to help much because it would do little to boost UK growth. “It’s a budget that takes the economy in the wrong direction, and is in that sense self-defeating in terms of growth and future government revenue.”
Much of the rationale behind the rearguard action is pragmatic. Reeves sees the City as…
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