Terror triggers flight of money from London

London Bridge is falling down. The ambiguous old nursery rhyme echoes through a report that says wealthy people are deserting the city in hordes. Migration of wealth is not just a lifestyle trend of the ultra rich; it is an early sign of an economy going down.

This is what Global Wealth Migration Review by New World Wealth says: “Over the past 30 years, the United Kingdom has been one of the biggest recipients of migrating HNWIs [high net worth individuals]. However, this trend changed in 2017 when the country experienced its first major HNWI net outflow. Although around 1,000 HNWIs came into the UK during the year, this was more than cancelled out by a bigger outflow of around 5,000 HNWIs, resulting in a net outflow of around 4,000 HNWIs for the year.” Brexit and higher taxes are two prominent reasons besides the one which may not surprise many people—rising crime levels and rising religious tensions, especially in London.

In September 2016, London mayor Sadiq Khan told a newspaper shortly before a meeting with New York mayor Bill de Blasio that he had a “sleepless night” after the New York terror bombing in which dozens of people were inujured. What he said next angered a lot of people including Donald Trump Jr. who tweeted: “ “You have to be kidding me?!: Terror attacks are part of living in big city, says London Mayor Sadiq Khan.” But Khan’s words were taken out of context. Khan had said being prepared for terror attacks was part and parcel of living in a big city.

Trump Jr. may have wrongly attributed an idea to Khan but many people might come to believe Khan made peace with violence after London’s death rate overtook that of New York for knife and gun crime. Reuters reported there were 15 murders in London in February against 14 in New York, according to London’s Metropolitan Police Service and the New York Police Department. For March, 22 murders were investigated in London, with 21 reports in New York.

James Cleverly, a Vice Chair of the Conservative Party, said Khan was “obsessed with getting on the telly, obsessed with getting photographed, obsessed with social media” and had not adopted any “strategic thinking” like Boris Johnson did when he was in charge. Even an MP of his own party, David Lammy, crticised Khan for not contacting him after four gang-related deaths in his constituency recently.

“London has experienced a steady rise in incidents of rape, terrorism, acid attacks and woman trafficking over the past few years. Religious tensions and anti-semitism are also at an all-time high in the city. London was obviously a hotspot for migrating HNWIs for many years. However, this trend appears to have changed over the past couple years as migrating HNWIs now prefer moving to safer “international cities” such as Sydney, Melbourne, New York and San Francisco. “International cities” refer to first world cities which attract business people from all over the world. They tend to have English as their main language. In last year’s report, we highlighted the fact that many wealthy Londoners were moving out of the city to small affluent towns such as Bray, Taplow and Marlow. This is a notable trend that is gaining momentum. A large number of wealthy Londoners are also leaving the UK altogether – many of these individuals are going to the US and Australia,” says Global Wealth Migration Review.

Other cities with large (1,000+) outflows of HNWIs in 2017 were Istanbul, Jakarta, Lagos, Moscow, Paris and Sao Paulo. The report says the top reason why HNWIs leave a country is safety, woman and child safety especially. Other reasons are lifestyle: climate, pollution, space, nature and scenery; financial concerns; schooling and education opportunities for their children; work and business opportunities; taxes, healthcare system; religious tensions; and standard of living. Austrailia, which tops the list of countries for large HNWI inflows, appears to offer the best of all.

“Australia was the top country worldwide for HNWI inflows in 2017, beating out its main rival the US for the third year running. Popular places for them to move to in Australia included: Sydney, Melbourne, Gold Coast, Sunshine Coast, Perth and Brisbane,” the report says.

“Australia’s location makes it a better base for doing business in emerging Asian countries such as China, Japan, South Korea, Hong Kong, Singapore and Vietnam. Australia was recently rated as the safest country for woman worldwide during our annual woman safety ratings. Australia is also a particularly safe country to raise children (although some describe it as a nanny state with too many rules). Australia has lower inheritance taxes than the US. Problems in the US healthcare industry. In the US, getting healthcare insurance can be difficult for incoming HNWIs. Notably, several international medical aids cover patients in all developed countries with the exception of the US (which is a big warning sign). In particular, the Affordable Care Act enacted in 2010 has not turned out well for wealthy and middle class patients in the US, with average premiums rising by over 120% since the act was passed in 2010,” the report says.

Though Khan, the London mayor, now appears to be in an overdrive to control the rising crime, he is still upset with the chiding he received from Trump senior as well as junior. After the London Bridge terror attack last, Trump attacked Khan over Khan’s warning that there was “no need to be alarmed”. Trump tweeted: “At least seven dead and 48 wounded in terror attack and Mayor of London says there is ‘no reason to be alarmed’!” In another tweet, he said, “We must stop being politically correct and get down to the business of security for our people. If we don’t get smart it will only get worse.” Khan had said, “Londoners will see increased police presence today and over the course of the next few days. There’s no reason to be alarmed.”

Trump plans to visit London in July, and Khan wishes he could shoot the messenger. He has hinted he would like to protest against Trump though it would be inappropriate for a mayor to do that. Amid this war of words, Khan has probably missed the sound of money leaving London.