Dubai, Mumbai, Shanghai or bye-bye. But do you really need to flee London, asks Ellen Alpsten
Dubai, Mumbai, Shanghai – or bye-bye. But do you really need to flee London, asks Ellen Alpsten
Dubai, Mumbai, Shanghai – or bye-bye. This was the saying amongst investment bankers in New York already a year ago. Back then, the global financial implosion was merely writing on the wall. Now this truth has dawned to more than just the former employees of Lehman Brothers.
But where do we go from here? Shall we go at all, or shall we stay? These are the questions that the profession that has shaped London life in the past decade has to face now. With the paradise of the City of London lost and big bonuses gone for at least a decade, where to turn to next?
Dubai’s tax-free status and the liberal interpretation of Islamic norms made it an attractive destination initially. But even Dubai is not the safe haven any longer that it once seemed to be. Lucrative advisory work is hard to come by in a region that relies on family ties and where trust is gained over decades or not at all.
Around the creek, inflated investment banker teams sit in some of the world’s most expensive office-space and are forced to manage IPOs at cost and broker deals for free. Bankers in London still hoping to relocate to the Gulf have at the moment little to look forward to.
The situation is similar in China and India, but for different reasons. The globalised markets, interlinked by the free flow of capital and goods, have already forced more than ten thousand Chinese companies to close down in the past weeks. Demand for textiles, white goods and gadgets stall in the US and Europe.
Ten thousand companies might seem few in the gigantic landscape of the Chinese economy, whose GDP is still going to grow an expected 10.2 per cent in 2008. This number, however, is described as ‘disappointing’ by experts and it will not be without repercussions on business centres such as Shanghai.
There is, of course, always the possibility of just going home. ‘Better weather, better food, and la Nonna to look after the children,’ said a formerly highly paid female banker, who is married to an Italian count and now follows him to the shores of Lake Como instead of commuting to Milan every weekend.
‘Better for my looks as well as for my marriage, too,’ she adds, laughing half-heartedly.
If that option to save face fails, it might be better to just stay put. If you decide to stay, what will you do? Fortunately, London always has a lot to offer. If your wallet alone no longer allows you a good life, you just have to be a bit clever about it.
It is back to school for some: out-of-work investment bankers retrain as teachers, and finally fulfil their wish of doing something worthwhile. Favourite subjects are mathematics and physics, highly sought-after qualifications by the government.
One Managing Director at Lehman’s now signed up for a 2-year course at the Institute of Master of Wine in London and is looking forward to his career change once he has passed his degree.
Another one reacted radically when the bell tolled for him: ‘We’ve let the house, taken the children out of their bloody expensive school, fired the nanny, gave the dog to the parents and we are off to Africa.’ Off to Africa, in order to work in an orphanage for a year, and for free.
On a more original note, Websites such as Etsy have grown exponentially since the beginning of the credit-crunch. People set up their individual electronic stall and offer all sorts of homemade and hopefully aesthetically pleasing goods.
Then, of course, there is the fact that a lot of London bankers have made so much money during the past, fat years that they and their families will not have to work for the next thousand years. Pierre Lagrange, for example, a founding member of one of the world’s biggest hedge funds GLG, took £400 million out of his business last year.
Even in the time of drought, you will not go thirsty with £400 million in your pocket. Somewhere, somehow, water will materialize, especially in London. However, Lagrange is not a vulture feasting on a corpse.
He carefully looks into the future for his business. GLG moved ecological issues mainstream with their green equities strategy and hangs on to that. In any case, he has the financial muscle to sit it out.
Will life in London still be so attractive for many people with Labour’s plans to begin taxing non-doms? The state will levy this sum at least once – as all those who thought of London once as an excellent location for trade and business might consider relocating.
The likes of Frankfurt, Luxemburg and Paris are gearing up for their arrival. London will then suffer in many aspects: What about the taxes these people now pay as stamp-duty, council-tax, road-duty, tax on income or money they remit to the UK? What about their ingenuity and their enterprising energy? What about the cash they bring as an affluent consumer to the economy?
And affluent consumers are still out there, even if they nowadays keep a low profile. They might tell their wives to please do the same. No more show-off shopping in Bond Street, a halt to hour-long pampering at Bliss Spa and do cut out competing with the other Alpha mums for a place in the nursery of Wetherbys and Eton House.
Nathalie Massenet, founder of Net-a-Porter, already offers the option of having your shopping delivered in a discreet brown paper bag.
That low profile, however, also affects London life. What about the professions and the people who thrived in the surplus of indulgence that the bankers allowed themselves? A lot of them are gone for good, such as the myriad of dog walkers and children parties’ organizers.
The most colourful and high-profile victims of our decreasing spending power are the finer things in life: art, dining out, wine and jewellery. The belief that art and antiques are recession-proof is an urban myth. The art-market lags behind the economic cycles by about 18 months and the stock of auction houses and wealthy collectors has always thrived on disasters.
One London gallerist, who wishes to remain anonymous, says: ‘The bottom end of the market is already dead.’ The main asset in the arts is knowledge, knowledge that has to be slowly attained or paid for. Demand for art forms such as photographic prints, long an easy start into collecting, dries up first.
If you still think of collecting wine, stick to Bordeaux. Anything else is better for seeking solace. Rare vintage jewels still attract interest, pieces, where ‘great design, quality of the stones and the workmanship are assured’, says Keith Penton, head of jewellery for auctioneer Christies. As for evening entertainment, lastminute.com now receives a record number of hits for their discounted dinner-and-show offers.
What goes up must come down, that we already learned toddler-age, while occupying the swings. It might even not be too bad for us. Society has placed too high a value on appearance, money and possessions. The lack of necessity makes for complacent, stale and uncreative people.
Remember, the best British films were made in the eighties, at the height of recession. The last shirt has no pockets, so enjoy life under all circumstances. Go on, you can do it. After all: Plus ça change, plus ça reste pareil.