There is no lack of entrepreneurial spirit in Britain - the only problem is a punitive taxation system that disincentivises people. The more you work [risking early death through heart attack], the more the government takes your money. With each budget, they come up with more ingenious ways to take more of the middle class's money!

Chuck, London, UK

Although a conservative, I'm afraid I've come to loathe the City, William.

Just the other day there was a story about Smiths Industries, once a successful, global British company, until forced to lose its crown jewel, the aerospace division. Now it's been forced to accept an MD whose talent is (apparently) making companies attractive to predators - he was previously with Scottish Power, sold to a Spanish company. So it loks like goodbye to Smiths, hello to a great big cashpile for the bonus wallahs. It is just so utterly sickening.

Julian Bassett, London, UK

This country was once the manufacturing and industrial capital of the world and it was mostly all based in the North. What has happened? Government policies issued from London have stripped away our manufacturing and industrial assets and turned us into a service based economy which is entirely suited to the way London wants to do things. Now every single city outside of London is reduced to little more than vassal states enslaved to the will of fat cat London politicians who are becoming fabulously wealthy off the backs of all the ordinary UK citizen.

Personally I would be glad if London went it's own way and gave the UK back to it's people. London is no longer representative of the rest of Britain, how many non-British people live there now? 50% or more is it? Maybe London is a World capital now rather than a UK one. Perhaps the capital should be moved to a city that is still a UK city like Manchester, Birmingham, Liverpool or even Edinburgh.

J Roberts, Manchester, UK

This sounds like the London brigade at it again becasue they are worried about losing their overinflated incomes. The 'city' is a parasite on the UK as a whole ask John Harvey-Jones.
If the 'city' in generating all this wealth where does it go and who benefits from it - the super rich who pay a much smaller percentage of their income in tax than the rest of the population.

George, Glasgow, UK

Cheaper labor costs outside of Britain alone cannot account for Britain's disproportional dependence on London and the financial services industry. While Britain has lost much of its traditional manufacturing jobs to other countries, so has the United States. The difference is that the US has been able to retain and develop new jobs through better educating and training its workforce so that companies like Microsoft, Apple and Intel are able to succeed. Britain (and much of Europe), for some reason, have not been able to make this transition to higher skilled jobs as successfully as the US. The lack of an entrepreneurial spirit in Britain is what is holding it back.

Brian, Boston, USA

Your analysis is spot on. Even if the changes appear to be about fairness on the surface, Mr Darling's cooking is going to ultimately cost a lot of money to the UK tax payer. Tax revenues generated by non doms are estimated to be £7bn and they tend not to use much of the State 's resources; it only takes a small proportion of them leaving to annihilate tax revenues from this draft legislation. And as you rightly point out in your article, it is also about failing to attract talents in the future.

We have a chancellor who lacks pragmatism and is too keen on ideology. It looks like New Labour, championed by Mr Blair, is veering to the Old Labour. This will be going unnoticed among the international business community, for sure.

Frederik Erker, London, united Kingdom

Many people here seemed to have grasped the obvious point that Britain being a "wealthy country" doesn't make its inhabitants any better off, any more than those Third World countries most of whose GDP is in the leader's Swiss bank account. London is a horrible place to live for the non-rich, most of whom would be perfectly happy to try life out without the City. Everyone in this country should pay fair taxes, and people who try to blackmail us should be treated like blackmailers.

Cipriano Mera, Lancaster,

Seems like a lot of scaremongering if you ask me. Britain has the second highest purchasing power parity in Europe, and considering that we're somewhat beyond Germany industrially, and they're a significant population advantage over us, I'd say we we're doing better than we should.

I do think that over regulation and taxation are detrimental though. I can't see why we should hold a moral high ground while our jobs get outsourced to Asia, and the Chinese 'government' buys out every natural resource corporation under the sun.

If we've to live with a gutless government willing to bend over at the drop of a hat, then why not do it properly? Lower taxes, both business and personal. Simplified taxation system, reduce benefits, introduce national service, and actually leave people with money to spend instead of burdening an already leaky ship with more debt.

Richard Armstrong, Rothbury,

What do you expect from a government whose ideology is based on Marxism.

louis blanc, Liverpool, merseyside

Lots of Trotskyites seem to be posting below. I wonder, are there web cafes in job centres these days?

Mr Rees Mogg quite rightly understands the role of finance in the world economy (essential, I would say) and our pre-eminent role in it. Unfortunately some people seem to wish a return to the 1970's. This country is fabulously wealthy compared to many others in the world, precisely because of the city, not despite it.

Robinson, Cambridge, UK

Britain already is an insolvent dwarf and has been so since "lend-lease" began in March 1941.

Andy, Hereford, England

"Yet in finance the City of London meets Tokyo or New York on level terms as a major player".

But Japan and the USA are still major industrial powers. They have not sacrificed their real economy i.e., the one that actually generates wealth, provides employment, encourages and sustains research in science and engineering, maintains standards in education as a consequence, thus providing hope for the future. Britain on the other hand had the lead in science and engineering over the rest of the world, and did not appreciate the real jewel in the crown it had received as a legacy from the past. Social disintegration is the result.

So now we are left with a big casino in London, which can up stakes and vanish at the press of a computer key. And this is what we are to laud.

DaveP, Beverley, UK

All very well, but the only person I know who feels enriched by the activities of the City is a Hedge Fund manager. And he would, wouldn't he? Otherwise, as we see inflation spiralling, a massive debt disaster just around the corner, for the average bloke or blokette on the street is entitled to ask about the City ...

Who cares? We keep being told how important it is, but it's all ones and zeroes whizzing around the internet. Men can build ships, money can make money but only the money makers prosper from that, whatever they may tell you. it gets boring when you are taxed till the pips squeak to be told that tax dodgers are making us wealthy, and must therefore be allowed to remain tax dodgers. It's just one law for the rich and one for everyone else. Rather like the MPs really. I'm hard pushed to say how this government has made my life any better or indeed, the City.

To conclude. I don't believe you, William.

Jeremy Poynton, Frome, Somerset

This fiasco over the non-dom tax changes marks the end of the predominance of the City in UK life and the decline in the UK's economy to below OECD averages.

The changes are a classice example of Art Laffer's supply side surve in action. When they were taxed at zero on their foreign income, the economy benefitted from their expenditures and received VAT revenues and stamp duties. With the incompetent changes proposed alittle income tax will be collected but large numbers of non-doms will leave for more pleasant pastures and their numbers will decline alongside the VAT receipts and stamp duties and the corporate taxes of their businesses that have also migrated.

But when did one ever expect new Labour to understand supply side economics?

oldasiahand, Guildford, UK

I am curious to know what sort of business that is going to be a great loss to Britain can relocate in Monaco at the drop of a tax inspector.

Henry Percy, London, UK

These non doms have helped to screw up the cohesiveness of English society. They have done this by hyper-inflating the cost of living in London in past decades -- particularly by turbo charging real estate prices -- with the ripples being felt all across the country. The knock-on effect that people than do the most essential work to society, like nurses & teachers, can no longer afford to live in many areas.

If a few non doms leave it will be neither here or there.

Karl, Auckland, New Zealand

You are of course right about the importance of London's earning power to the U.K. economy. It's a measure of just how thoroughly it's managed to destroy everything else.

From Superstate to tin-pot City-state in little more than two generations - who'd have believed it?

Ken Leyland, Liverpool, U.K.

The irony is the Labour governments obsession with finance has created the dangerous position we are now in. This government has given too much to the City over the last ten years. I concede the city is vital to the UK and world economy though I think some aspects are overstated. Traditional areas like insurance, equity and debt finance are obviously tightly linked to the real world economy but many of the modern city trades are nothing more than glorified roulette. The balance needs to swing back to encouraging the rest of the economy aside from finance and property to hopefully pull us back from the brink we find ourself on.

Bruce Mcaaw, Grantham,

The City of London is not the jewel in the crown of the British economy. It's the drag chain on the rest of the economy - particularly manufacturing - realising its potential.

DickW, Aberdeenshire, Scotland

Absolute nonsense! The City has been served at the expense of real high value manufacturing. As an engineer I have seen our manufacturing base decimated whilst the City has been upheld as a saviour. All these high earners want is a placid service economy at the cheapest price. They want to be able to use London as a play pad and safely store their millions, nay billions in some cases.The only people I have simpathy for are the true philanthropic industrialists that took a pride in creating great enterprises and offering better conditions for the workforce. Governments since the 1970s have abrogated their responsibility to the proletariat and are draining the Middle classes to pay for those at the bottom of the food chain.

Steve Marchant, Broadhempston, UK

William Rees-Mogg's column and your leading article correctly outline the problem. It is worrying that Downing St. appears so cut-off from the reality of the City's success. I hope that present policies are modified.

Graham Stodd, Chichester,

These proposals have the stamp of Gordon Brown all over them. I'm not sure though that it is ideology that is driving them but desperation. That desperation comes from the awful state of our national finances, which were bad enough even before adding another £95 billion of national debt courtesy of Northern Rock.

Gordon Brown has been a disaster for the UK as Chancellor, saturated as he is in political and sociological theory with no real understanding as to how things actually work in the real world. Darling's disaster for us is that he is prepared to act as the ventriloquist's dummy, while the architect of our misfortunes continues to run the show.

figurewizard, Hampshire, UK

Jeremy Martin, George Osbourne may have proposed a tax on non-doms, but his was a much simpler system. In th epanic of trying to put together a budget, whilst preparing for the election that never was, Messrs Brown and Darling (not for the first time) cobbled together a complicated and costly plan. However, I agree with others that what is good for London is not necessarily good for the rest of the country. If there wasn't the cash, in the way of bonuses and high salaries, washing around London, then many young people living many miles distant would be able to afford to buy a home. As it is, those getting these vast amounts of money have skewed house prices the length and breadth of the country.

David Leslie, Perth, Scotland

Taxation is one of the few tools that can be used to generate business activity; create wealth that can be used to increase the workforce and profits that can be ploughed back into research & development and further growth.
Confiscatory taxes - or attempts to redistribute income - kill the incentives to grow businesses.
Grants and similar incentives - funded by taxes taken form successful businesses - and often given to lame duck enterprises - would be unnecessary if taxation of business was based on distributions - viz. dividends; bonuses; benefits in kind; share options and the like.
A Distributed Profits Tax (DPT)would allow business to grow by reinvestment.
Similarly, a Consumption Tax (CT)would allow earners the discretion on how to spend those earnings.
Both DPT & CT have the merit of simplicity; they would be popular with earners and business alike.
CT would be based on a sliding scale, with necessities zero rated and luxuries bearing a higher proportionate rate.

MR. MYLES STANISTREET, NERAC, FRANCE

The earning power of the City of London is a massive jewel in the crown of the Exchequer. Jeremy Martin (supra or infra) argues that the morass is caused by George Osborne. It might be more properly argued that the blame lies with Gordon Brown.

He has raised taxes to very high levels for recent times, spent the proceeds in unsustainable ways, and leaves little or no room for future increases except through imaginative ways.

It is a sign of a Government or Party which has lost its way when they argue that "I heard a speech, it sounded like a good idea, but now that I have brought forward what I thought I understood as a policy, people complain"

Call the election and let's get Britain back on track!

Frank Keegan, Alderley Edge,

The City of >London is not the "jewel in the crown", it is a cuckoo, driving out a more balanced economy, both in terms of activities and geography. the country may, on average, be more wealthy with the City, but it is also more polarised - polarised between the super-rich (with bonuses that no amount of sophistry can justify - maybe the Beefeaters in the Tower of London should be entitled to take home some of the crown jewels each year?) and the rest of us working but getting poorer. Not to mention the moral corruption that seems to permeate how financial services operates (even more than other industries). London is a no-go area for anyone but very very rich people to live, or illegal immigrants working for the super-rich. I think we'd be a better country without the City, maybe poorer, but better in almost every other way. The love of money truly is the root of many evils.

Anonymous, Manchester,

Running the entire economy for the benefit of the City of London does have bad consequences for the rest of us. However, that does not excuse Darling and Brown from their ignorance and lack of curiosity about our tax system.

Frank Upton, Solihull,

You rightly point to the damaging uncertainty. Businesses do not want to invest in a country which can spring unpleasant surprises. Politicians, media and public need weaning from the annual nonsense of dramatic Budget.

Mike Evans, Midsomer Norton, UK

You seem to forget that it was George Osborne at the Tory conference that set this hare running and goaded Labour into this morass. Pure showmanship has now propelled us into a position where it is now almost impossible politically to back down in spite of the dangers you point to. Shame on the Tories who should know better!

Jeremy Martin, Exmouth, UK

The labour party think they understand economics. Each time they come to power - I leave...........

Richard, Bucharest,

We have an increasingly serf international economy. Businesses take advantage of lower standards for labor, the environment, working conditions, housing, etc in the developing world to push down the standard of living for those in the developed world while reaping huge financial gains. It's time for the international community to set higher standards for working conditions, etc on a global basis so this unscrupulous exploitation can be mitigated.

John, New York, USA

The ignorance and incompetence evidenced by these tax changes are at least as damaging as the changes themselves.

David Williams, Eastnor, England