Over canap\u00e9s of beef and stilton pie, bone marrow gravy and mushy peas, the financiers at JP Morgan\u2019s New York headquarters held their champagne flutes aloft for a toast: \u201cHis majesty the king.\u201d<\/p>\n
Just days before Rachel Reeves\u2019s budget \u2013 amid the chancellor\u2019s efforts to soothe business fears and bond market jitters \u2013 Jamie Dimon, the Wall Street banking company\u2019s boss, was hosting a birthday celebration for King Charles at its new $3bn (\u00a32.3bn) Manhattan headquarters.<\/p>\n
Despite the union jack emblazoned on the skyscraper, the king was not there. Varun Chandra, the prime minister\u2019s envoy, however, was among the 400 guests. Dispatched, according to the Financial Times, to reassure the JP Morgan boss of Labour\u2019s pro-business stance.<\/p>\n
This week \u2013 hours after banks were spared a tax rise<\/a> in Reeves\u2019s \u00a326bn budget \u2013 Dimon unveiled plans<\/a> to build a 279,000 sq metre (3m sq ft) tower in the Canary Wharf district of London, with a caveat that a \u201ccontinuing positive business environment in the UK\u201d was required.<\/p>\n It is understood that planning issues and long-term considerations are more important for the bank than any one budget. But the episode still highlights how financial services has won a prized status in government, amid ferocious City lobbying to ensure it was one of the few off-limits sectors in Reeves\u2019s smorgasbord tax-raising budget<\/a>.<\/p>\n For months Labour has been rolling out the red carpet for Wall Street and City financiers, amid a far broader campaign to woo bankers and company bosses after the party\u2019s pre-election love-in with industry turned sour.<\/p>\n Norman Blackwell, the former chair of Lloyds Banking<\/a> Group, who also advised Margaret Thatcher on policy in the 1980s, said Reeves had \u201cwork to do\u201d to rebuild the confidence of the City after her \u00a340bn tax-raising 2024 budget.<\/p>\n \u201cBefore the election they talked as though they would be a party that would recognise the importance of wealth creation in the economy by business and entrepreneurs. Everything they have done in government has gone in the opposite direction,\u201d he said.<\/p>\n An artist\u2019s impression of the planned JP Morgan Chase building in London\u2019s Canary Wharf. The bank went ahead with the investment after assurances from an adviser to the UK prime minister. Photograph: JP Morgan Chase\/PA<\/p>\n \u201cThey have increased taxes on business, increased regulation in the labour market, [and] the threat to high earners and non-doms. If you look at the numbers of entrepreneurs and rich people leaving the country \u2013 they have convinced people that they do not value and will not support entrepreneurs.\u201d<\/p>\n Despite the reprieve for banks, Blackwell said the budget was still unlikely to help much because it would do little to boost UK growth. \u201cIt\u2019s a budget that takes the economy in the wrong direction, and is in that sense self-defeating in terms of growth and future government revenue.\u201d<\/p>\n Much of the rationale behind the rearguard action is pragmatic. Reeves sees the City as critical to the government\u2019s growth mission, with financial services among the eight critical sectors backed in Labour\u2019s industrial strategy. Finance contributes almost a tenth of UK GDP, employs 1.2 million people, and brings in more than \u00a340bn a year for the exchequer.<\/p>\n In Birmingham earlier this autumn, the chancellor hosted a gala dinner for 300 financiers and business chiefs \u2013 putting on a ballet and a spoken-word poetry reading on the eve of its first regional investment summit. Sponsored by HSBC, Lloyds, Eon, KPMG, and IBM, the event the next day at Edgbaston cricket ground secured more than \u00a310bn of investment in Britain.<\/p>\n However, Labour\u2019s proximity to the boardrooms of the Square Mile does not sit comfortably with the party\u2019s own MPs and voters for whom the memories of the 2008 financial crisis still sting. Most people \u2013 including a majority of those considering voting for Nigel Farage\u2019s Reform UK \u2013 would have backed a windfall tax<\/a> on banks at the budget.<\/p>\n \u201cThe chancellor\u2019s failure to levy a windfall tax on the banking sector in the budget is a damning indictment of the stronghold the sector continues to have over our politics,\u201d said Sara Hall, a co-executive director at the campaign group Positive Money.<\/p>\n \u201cIt is very concerning that whilst the public is asked to contribute more to fix our crumbling public services, banks got off scot-free \u2013 it\u2019s high time we have a proper public conversation about the sector\u2019s lobbying and influence.\u201d<\/p>\n The Goldman Sachs boss, David Solomon, advised Rachel Reeves last month against increasing bank taxes. Photograph: Mike Blake\/Reuters<\/p>\n Last month Reeves hosted Goldman Sachs boss David Solomon<\/a> in No 11 Downing Street, with the head of the Wall Street firm advising her against increasing bank taxes. Politico reported he ripped up his briefing notes to focus exclusively on the issue, a detail denied by the bank.<\/p>\n This week, after the budget, Goldman announced that it would expand its Birmingham office and hire 500 staff, in a move that would more than double its workforce in the UK\u2019s second-largest city.<\/p>\n skip past newsletter promotion<\/a><\/p>\n Sign up to Business Today<\/p>\n Get set for the working day \u2013 we’ll point you to all the business news and analysis you need every morning<\/p>\n Privacy Notice: <\/strong>Newsletters may contain information about charities, online ads, and content funded by outside parties. If you do not have an account, we will create a guest account for you on theguardian.com<\/a> to send you this newsletter. You can complete full registration at any time. For more information about how we use your data see our Privacy Policy<\/a>. We use Google reCaptcha to protect our website and the Google Privacy Policy<\/a> and Terms of Service<\/a> apply.<\/p>\n after newsletter promotion<\/p>\n The story could have been different. Reeves had been actively considering a multibillion-pound bank windfall tax to help repair the public finances and fund the removal of the two-child benefit limit.<\/p>\n