"London banking MDs are struggling to pay their bills"
A cold wind is blowing for senior bankers in London. It's not just that Citi's cutting jobs. It's not just that bonuses are likely to be down. It's the climate overall. Managing directors, many of whom are on salaries exceeding £300k cannot afford their lifestyles.
School fees are part of the problem. Fortunately, I'm largely done with my own kids, but if the Labour Party adds VAT to school fees after the next election it's going to be problematic for a lot of people. There are a lot of senior City folk with multiple younger kids at school, and the fees have been rising by 8%+ a year for a while. When you add similar inflation for '24 and '25, you get fees of £30-£35k for day students and £60k for boarders. This is before you even consider the VAT. A lot of senior London bankers are going to be struggling to put their children through the private school system!
Rising school fees are only part of the problem, though. Senior bankers are also facing mortgage resets at higher long term rates, and many are not prepared for this.
These headwinds are all coming at a time when basic pay is being re-rated downwards following the removal of the bonus cap. Even if bonuses are paid this year, a lot of people are going to be very wary about spending them.
Gabriel Baxter is the pseudonym of a London banking MD with two and a half decades' experience
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