Category Archives: Finance

Towers & Tax Havens in The City of London



20 Fenchurch Street

The recent Panama Papers scandal has scratched the surface on the sophisticated processes by which wealth is hidden by the global elite. In his book Treasure Islands, Nicholas Shaxson identifies the City of London as the leading recipient of illicit global finance, a long held tradition of diverting capital through London’s financial mechanisms in order to ‘wash it clean.’ Rather than assign blame upon easily identifiable physical islands such as the British Virgin Islands, Cyprus or the Crown Dependencies, Shaxson reveals that the City of London, using all of its murky colonial clout, remains to this day the primary source of capital inflows from around the world. This status has remained intact, an impermeable entity free from government intervention and also free from the classification as a private enterprise.

The City of London, defined as a 1.22 square mile piece of land with a 350,000-strong workforce yet only 7,000 residents, accounts for 46% of the world’s foreign exchange, 45% of over-the-counter derivatives trading and 70% of Eurobond turnover with more foreign banks than any city in the world. The reason financial services companies choose London is, according to Shaxson, because it ‘allows them to do what they cannot at home.’ Ever since the 1980s, London’s attraction as a safe haven has allowed overseas investors from all over the world to redistribute wealth and accumulate assets, often in the property market. A staggering £170 billion worth of UK property is now held overseas, including 75,000 properties owned by companies or individuals located in offshore tax havens as this terrifying map published by Private Eye demonstrates.


Front elevation of Mansion House

There is, across many levels, the general association with high-rise construction and a booming economy. Cranes are identifiable symbols of progress which can be used to demonstrate a healthy dose of investment in a given place. There is, of course, plenty of truth in this – the demolition, planning and construction process all generate economic activity, one of the reasons why sensitive re-use of buildings, even when more appropriate, might be bypassed. However, the sporadic sprouting of towers across the City of London reflects more on the very recent change in attitude towards tall buildings as a matter of policy than it does the City flexing its financial muscles. The Mayor and certain local authorities such as Lambeth, Southwark and Tower Hamlets are now pursuing a more lenient stance towards high-rise towers, particularly as those on the southern bank of the Thames tend to fall outside London’s treasured protected views.

The reality is that the sophisticated mechanisms for global finance to function have long since taken place without the physical need for office space or face to face human interaction and is as such increasingly invisible. The effects of London’s stubborn attitude to remaining ‘open’ to global investment whatever the implications are not simply the risk of taller buildings but the total liberalisation of vast swathes of London property, inevitably making it more problematic to coherently plan, develop or for younger people to access. If anything, whether it be the Walkie Talkie or the Cheesegrater, the emphasis of building high is more in line with the City of London Corporation’s outward-facing motto of being ‘committed to maintaining and enhancing the status of the City as the world’s leading international financial and business centre’ than it is as a direct response to a demand for office space.

Whereas in the past there was the vague notion of a corporate body being local to a particular city or place, the ties between global banks and an identifiable place are now far more blurred. The architectural offerings of the City of London are packed tightly around a series of narrow streets and medieval interlocking passageways. Relics of the Big Bang years of the mid-1980s can be found in smoked glass office blocks, with occasional Postmodernist indulgences such as Stirling’s One Poultry. However recent revelations show that the complexity of modern financial tools to generate profit does not necessitate the construction of towers, it has much more significant, far reaching implications which affect the affordability of property across a much wider scale than the claustrophobic confines of the City of London.