Andrew Wesbecher moved to London from New York in 2006 to sell software to banks and hedge funds. This month he joined the exodus of American expatriates fleeing high taxes and the city’s shrinking financial industry.
The number of U.S. citizens in Britain fell 3.8 percent to 126,000 in the 12 months through September, according to the Office for National Statistics.The trend probably continued this year, with the Confederation of British Industry estimating the U.K. financial industry will lose about 45,000 jobs in the first nine months of 2009, or 4.3 percent of the total.
Americans are heading home as Britain plans a 50 percent tax rate for those who earn more than 150,000 pounds ($248,000) a year and employers cut benefits for workers living abroad, reducing the allure of London. That comes a year after the U.K. said foreigners who have lived in the country for more than seven years must pay 30,000 pounds annually or give up the special status that shields overseas income from British taxes.
The worst recession since World War II has left U.K. residents facing tax increases and spending cuts after Britain’s monthly budget deficit ballooned to a record 8 billion pounds in July. In addition, some employers are reducing benefits such as tax equalization, school tuition for children and cost-of-living allowances that supplement expatriate salaries.
Huddling under an umbrella during a July downpour, Wesbecher said he was no longer willing to put up with the frustrations of life in London after his commissions dropped and Palo Alto, California-based Tibco eliminated his expatriate benefits, cutting his take-home pay by 75 percent.“This is what passes for summer in London,” he said, sipping an iced latte in the city’s main financial district. “The quality of life is a lot harder. Things are more expensive and the houses are smaller. Even public transport is cramped. A New York subway car is like real estate in comparison.”
The economic picture is also gloomier in Britain. The U.K. economy shrank 5.6 percent in the year through June, compared with 3.9 percent in the U.S. London’s financial industry lost 29,371 jobs, or 8.3 percent of the total, last year, according to the Centre for Economic and Business Research. Financial companies in New York cut 20,200 jobs, or 4.3 percent, data from the state Labor Department show.