Will Brexit harm the City of London's tax haven? With weak regulation, money laundering, and satellites like BVI, Cayman Islands, and Jersey, everyone knows it's already a tax haven. The UK is threatening to be more of a tax haven if they don't get their way on other issues in the Brexit negotiations, but the EU will be vigilant on this issue, in John Christensen's opinion. He notes that the General Agreement on Trade in Services (GATS) does not guarantee trade in most financial services. He says UK suffers from finance curse (like the resource curse increasingly studied in political science). He predicts that the EU will find it easier to regulate financial services after the UK is gone.
The cost of the financial crisis was $6.5-$14.5 trillion, according to calculations by Gerald Epstein, of the University of Massachusetts, Amherst. The bailout enabled finance to make profits far beyond what was justified based on the risk banks took on prior to the bailout. Economic rent has been generated through excess compensation, drawing more top graduates into the sector. Private credit/GDP over 90% or so leads to lower economic growth. The U.S., UK, and Iceland all had been at 200% of GDP.
"Overcharged? The High Cost of High Finance" is the name of the report.
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