Is Labour playing with fire when it comes to bankers?

The chair and chief executive of Goldman Sachs, David Solomon, has told Sky News that London’s status as one of the world’s preeminent financial centres is “fragile”, because of the continuing effects of Brexit, increased competition from other European centres, and the tax treatment of the US investment bank’s most highly paid staff.

- SEAN O'GRADY

Although Solomon cuts a rather remote figure with concerns far removed from the average British family, the fact is that financial services and the City are such a significant part of the economy that his remarks carry some serious implications for the economy, and thus the living standards of all. So he's worth listening to.

What is at issue?

Solomon points out that his bank, one of the largest in the world, has more people employed in continental Europe and proportionally fewer in London than was the case before Brexit. As a result, the UK doesn't enjoy the spending these “absent” workers would otherwise inject into the local economy.

Even in its current “fragile” state, the financial services sector contributes about £44bn to the Exchequer, not far off the entire defence budget, and it could be even more, given the right conditions. The temptation for ministers is to change rules on tax and regulatory rulebooks, to boost banking profits and thus tax revenues, social spending and investment. We may term this “Rachel’s Dream”.

What’s wrong with London?