City hits out at EU hedge fund proposal
The financial community believes that the EU's proposals for private equity and hedge funds threaten economic recovery
The role of the City of London as one of the world’s preeminent financial centres came under attack for the second time in two weeks yesterday, this time from proposed EU rules for private equity and hedge funds.
The EU wants private equity firms with more than €500 million under management and hedge funds with more than €100 million of funds to file detailed financial information with the Financial Services Authority. Private equity firms will also need to file figures relating to debt, risk and cash.
If the European Parliament approves the proposed legislation, about 1,000 British companies – owned by private equity firms either headquartered or with an office in the EU and with more than €500 million under management – would be saddled with annual compliance costs estimated at about £30,000.
The financial and business community said that the move threatened both Britain’s economic recovery and the City’s status as one of the world’s most respected financial centres.
John Cridland, Deputy Director-General of the CBI, warned that the proposals could spark an exodus of private equity from London, while hedge funds said that thousands of jobs across Europe were threatened. Mr Cridland said: “At its worst, this draft directive could divert private equity outside the EU. Because it is regulating fund managers, there is no good reason why somebody should stay in London if they could move to Switzerland. Business needs private equity to help lead investment out of recession.”
The EU proposal is the second blow in a fortnight to the financial industry, which is already predicting a brain-drain from Britain because of the rise in the top rate of income tax from 40 per cent to 50 per cent announced in the Budget.
Simon Walker, chief executive of the British Venture Capital Association, said yesterday that private equity should be exempt from the draft EU legislation, and that even the European Commission had conceded that it did not pose a“systemic risk”.He said: “We are calling on the UK Government to take a strong position on this. The UK economy will be deeply and disproportionately damaged by this.” (AtW's comment: if simple reporting requirements damange "economy" then it's not economy it's a load of tulip)
Mr Walker said that the EU proposals were less serious than many had expected, but that he remained “very deeply concerned about the damage they could do”. It had been expected that all private equity firms with €250 million or more under management – rather than €500 million – would be affected by the proposals.
The 8,000 privately owned British companies not owned by private equity will have far less onerous disclosure requirements and so will have an unfair advantage, Mr Walker said. He argued that London would be disproportionately affected because it is home to most of the European private equity industry.
Jonathan Russell, chairman of the European Private Equity and Venture Capital Association, estimates that about 5,000 private equity-owned companies will be affected across the EU. He said: “There is no clear rationale why middle-market companies and their long-term backers will be made to suffer under proposals prompted by the failure of investment banks and designed for short-term trading funds.”
Alistair Darling admitted yesterday that little, if any, economic calculation went into his decision that £150,000 should be the starting point for a 50 per cent rate of income tax. He told the Commons Treasury Committee: “I thought that figure [£150,000] is an appropriate figure and I decided that was the right level at which to pitch it.” (AtW's comment: that's just above his salary?)
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FFS, how the **** requirement to report to relevant authority details on investments would threaten recovery?
The financial community believes that the EU's proposals for private equity and hedge funds threaten economic recovery
The role of the City of London as one of the world’s preeminent financial centres came under attack for the second time in two weeks yesterday, this time from proposed EU rules for private equity and hedge funds.
The EU wants private equity firms with more than €500 million under management and hedge funds with more than €100 million of funds to file detailed financial information with the Financial Services Authority. Private equity firms will also need to file figures relating to debt, risk and cash.
If the European Parliament approves the proposed legislation, about 1,000 British companies – owned by private equity firms either headquartered or with an office in the EU and with more than €500 million under management – would be saddled with annual compliance costs estimated at about £30,000.
The financial and business community said that the move threatened both Britain’s economic recovery and the City’s status as one of the world’s most respected financial centres.
John Cridland, Deputy Director-General of the CBI, warned that the proposals could spark an exodus of private equity from London, while hedge funds said that thousands of jobs across Europe were threatened. Mr Cridland said: “At its worst, this draft directive could divert private equity outside the EU. Because it is regulating fund managers, there is no good reason why somebody should stay in London if they could move to Switzerland. Business needs private equity to help lead investment out of recession.”
The EU proposal is the second blow in a fortnight to the financial industry, which is already predicting a brain-drain from Britain because of the rise in the top rate of income tax from 40 per cent to 50 per cent announced in the Budget.
Simon Walker, chief executive of the British Venture Capital Association, said yesterday that private equity should be exempt from the draft EU legislation, and that even the European Commission had conceded that it did not pose a“systemic risk”.He said: “We are calling on the UK Government to take a strong position on this. The UK economy will be deeply and disproportionately damaged by this.” (AtW's comment: if simple reporting requirements damange "economy" then it's not economy it's a load of tulip)
Mr Walker said that the EU proposals were less serious than many had expected, but that he remained “very deeply concerned about the damage they could do”. It had been expected that all private equity firms with €250 million or more under management – rather than €500 million – would be affected by the proposals.
The 8,000 privately owned British companies not owned by private equity will have far less onerous disclosure requirements and so will have an unfair advantage, Mr Walker said. He argued that London would be disproportionately affected because it is home to most of the European private equity industry.
Jonathan Russell, chairman of the European Private Equity and Venture Capital Association, estimates that about 5,000 private equity-owned companies will be affected across the EU. He said: “There is no clear rationale why middle-market companies and their long-term backers will be made to suffer under proposals prompted by the failure of investment banks and designed for short-term trading funds.”
Alistair Darling admitted yesterday that little, if any, economic calculation went into his decision that £150,000 should be the starting point for a 50 per cent rate of income tax. He told the Commons Treasury Committee: “I thought that figure [£150,000] is an appropriate figure and I decided that was the right level at which to pitch it.” (AtW's comment: that's just above his salary?
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FFS, how the **** requirement to report to relevant authority details on investments would threaten recovery?
The EU hates the 
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