by Jerome a Paris
Sat Dec 1st, 2007 at 08:12:06 AM EST
You read it here first. Now it's in the pages of the economist:
The City of London's tumble
At the start of this decade, the financial sector--banking and securities, insurance and specialist services like shipbroking--made up 5.5% of national output; by 2004 that share had jumped to 8.3%. Over the same period manufacturing dwindled from 17.9% to 14.1%. The financial sector's expansion has continued apace: by 2006 it made up 9.4% of the economy, according to provisional official estimates.
The recent City-led expansion of finance in Britain has meant that a sector worth almost a tenth of the economy has been responsible for 30% of overall GDP growth over the past three years.
In the past decade Britain's financial sector has contributed about 30% of all corporation-tax revenues. For all the attention devoted to how some escape their fair share of taxes, the taxman has also reaped handsome returns from the City's high fliers, who make up many of the top 1% of earners contributing 22% of income-tax receipts. The fiscal dividend has been vital in paying for Labour's big public-spending increases.
It has come to seem, for many people, a sort of laboratory in which a rawer, less-cohesive Britain is emerging; a crowded, hustling place of vaulting earnings for the rich and of widening income disparities, which drains talent and wealth from the rest of the country.
Despite these fears, those who cheer as the City falters, will be wrong. The gains from London's position as a global financial hub, a source of envy to other countries, outweigh the losses. Every economy needs an engine-room: better one manned by bankers than none at all.
Previous "Anglo Disease" content:
- Anglo Disease - early signs of hangover generate denial by Jerome a Paris on November 22nd, 2007
- Anglo Disease: Dollar Dump & Boom-n-Bust by Jerome a Paris on October 30th, 2007
- Anglo Disease: hangover in Manhattan by Migeru on October 15th, 2007
- Anglo Disease fever by Jerome a Paris on August 28th, 2007
- Anglo Disease - Fools and Bourses by ChrisCook on July 9th, 2007
- Anglo Disease watch (5) - just break the thermometer and all is well by Jerome a Paris on July 5th, 2007
- Anglo Disease watch (4) - No industry is vital - except finance by Jerome a Paris on July 4th, 2007
- The Anglo Disease (3) - an introduction for non-economists by Jerome a Paris on June 24th, 2007
- Anglo-Disease Sidelights (1): UK = Tax Haven by afew on June 22nd, 2007
- Anglo Disease (2) - Martin Wolf's take by Jerome a Paris on June 19th, 2007
- The Anglo Disease - Financiers worried about end of great bull run by Jerome a Paris on June 18th, 2007