The thought of Jeremy Corbyn as PM has Jewish investors running for the hills

The possibility that John McDonnell could soon run the economy and set taxes has prompted several Jewish businessmen to divest from the UK

Labour leader Jeremy Corbyn

At the peak of the financial crisis a decade ago, I found myself on Yom Kippur security duty at my local synagogue in Richmond.

The conversation among arrivals was invariably the same. “What should I do with my cash to keep it safe?” was the question. As a City journalist I am forbidden from providing individual financial advice by the Financial Services Act, but I did my best — even though one should not discuss business on such a solemn day — to allay concerns.

Once again, as 2018 turns into 2019, many of the same concerns are haunting the Jewish community. People of financial means are invariably concerned with protecting what they have earned or businesses they have created for themselves and future generations.

A high degree of uncertainty has unsettled their lives. The impact of Brexit on business interests is obviously a factor. But even though it could reshape the way we are governed and live for generations, it does not cause the same amount of consternation as the potential sight of Jeremy Corbyn and his Marxist Shadow Chancellor, the deceptively bank manager-like John McDonnell, marching up Downing Street.

Mr McDonnell’s lengthy Who’s Who entry declares “generally fomenting the overthrow of capitalism” as one of his recreations. Nice.

Mr Corbyn’s failure to clamp down on the anti-Zionism and antisemitism in his party is frightening enough for many in British Jewry. But of equal concern — not just for Jewish business people but everyone who believes in free markets — are Labour’s economic and financial proclamations. Aside from the threat of wholesale nationalisation, from the railways to the big six energy companies and land banks held by housebuilders, Labour wants to overhaul property rights and taxes.

One McDonnell idea is to grab 10 per cent of the shares of every company, public and private, with more than 250 workers. The result would be a calamitous fall in stock markets and wealth held in shares.

But that is just part of it. Among the policies outlined is a restoration of taxes on companies to previous higher levels of 30 per cent or more from the current 19 per cent, even though all the evidence shows that the lower rate has generated more income because it discouraged avoidance.

Among the changes to personal taxation proposed would be a return of the highest rate 50 per cent band on people earning as little as £80,000 a year, plus tax surcharges on existing wealth.

Mr McDonnell chillingly observed in 2012: “The wealthiest 10 per cent own £4,000 billion. If you took 20 per cent of that you would then have £800bn and we could tackle our deficit — we could tackle our debt — four fifths of our debt would be wiped out.”

Given these threats both in the past and more recently, it is not surprising that many people are already taking actions to protect their interest.

In the 1920s and 1930s, the confiscation of Jewish assets in Germany and elsewhere signalled the start of the Holocaust, a period that is built into Jews’ DNA. The late Sir Siegmund Warburg, scion of one of Europe’s great merchant banking families, arrived in the City of London almost penniless as a result of Nazi attacks on Jewish banks. He ended up recreating one of the great investment banks of the post-war period.

Baron David de Rothschild, the effective head of the famous banking dynasty, saw his family’s French wealth all but destroyed by the late President Mitterrand nationalisation of the banking system. He had to rebuild from the ground up under Mr Mitterrand’s successors.

More recently Francois Hollande’s government (2012-17) raised the top rate of tax to 80 per cent, triggering a large-scale migration of Jewish French nationals from Paris to London as they sought to escape the blight of unconscionably high taxes.

In my recent conversations with Jewish business leaders, obviously reluctant to be identified, several trends have already emerged. Some of the most wealthy have been engaged in a programme of divestment from the UK, moving wealth offshore to low tax destinations.

A mixture of concerns about the future of the retail market in Britain and America (partly as result of the competition online) led Australian shopping centre tycoon and Shoah refugee Frank Lowy to sell his Westfield shopping centre group to European retail holding company Unibail-Rodamco in December 2017 for an astonishing £18.5 billion in cash.

On a smaller scale, two other serious City players are preparing to move their wealth and domicile to Israel. One has bought a five bedroom, ultra-modern villa in Herzliya Pituah, a favourite beachside haven for the affluent.

That money is moving out of the UK is indisputable. A recent survey by data crunchers EPFR (part of the Informa media group) found that S1.01 trillion (£800 billion) has left UK equity funds, money invested in UK shares, since the Brexit referendum in June 2016.

A survey of clients conducted by the investment house Schroders found that 35 per cent of the clients of financial advisers had moved money overseas because of Corbyn-style concerns. The United States is the most favoured destination for UK residents.

When I recently questioned a top Jewish property philanthropist about what he proposed to do about Mr Corbyn, he confirmed that he had already taken precautionary action, preferring to invest new money overseas rather than the UK.

Another community figure, successful in pharmaceuticals, has tipped much of his wealth into a charitable foundation where it should be safe from Labour’s marauders. He intends to up his charitable contributions both here in the UK and on educational projects in Israel.

Paradoxically, there is the possibility that because of fear of tricky times ahead some entrepreneurs are bringing forwards plans to bolster foundation funds rather than wait for retirement or death as previously intended.

Another commercial Jewish family I know was advised by their Manchester-based financial advisers to re-open their will and inheritance plans. Using actuarial tables, the adviser conducted an audit of the parents’ life expectancy, generously budgeting for each year including putting money to one side for care costs at the end of life.

Having assessed actual needs, the remains of the money is now being distributed to children and grandchildren with instructions to make sure it is spent or locked up in tax efficient vehicles, such as pension funds, before Mr Corbyn and Mr McDonnell come looking.

Friends who already have a property bolt-hole in Israel are focusing on holding some of their wealth in more traditional stores of value such as gold bullion and diamonds. Josh Saul of the City-based Pure Gold Company reports a huge upsurge of bullion buying as a result of Brexit uncertainty and the increasing risk of a Corbyn-led government. “The majority of our clients are buying gold for the long term but there has been a 36 per cent uptick in clients buying gold to hold for the short term and take advantage of market volatility.

“Other buyers have sold property and converted it to gold rather than have a large sum of cash in a bank account. Some of them are waiting for a better buying opportunity as they expect property prices to fall in the near future. While they wait they seek protection in something they know will be there in the morning,” Mr Saul says.

Closer to the north London Jewish neighbourhoods, Trevor Abrahamson of Glentree Estates told the Spectator that he has seen several families who seemed deeply committed to Britain sell up in recent months. “I know an Argentine family that bought a home in Maida Vale, as well as office space, to set up a restaurant and property businesses…They sold everything and moved back to Argentina.”

That must be regarded as a bold call, given that the Argentine economy has been a basket case, subject to huge capital flight and is only being kept afloat by the largest ever International Monetary Fund credit of $50 billion (£39bn).

Not everyone is panicking at the prospect of a Corbyn led government. But the examples of socialism in France under Hollande and the extreme example of economic and social collapse in Venezuela offer haunting images of what can go wrong.

Clever money already has moved offshore and Jewish property developers have in some cases been liquidating portfolios.

Individuals are establishing boltholes in Israel and Florida to make sure they are out of reach of wealth taxes, Brexit turmoil and antisemitism.

In making such difficult choices they have history on their side.

Alex Brummer is City Editor of the 
Daily Mail