The EconomistAugust 3rd 2019 Finance & economics 61F
ed up withpolitics in America, Madon-
na left in 2017 and set up home in Lis-
bon. As Portugal’s population shrinks its
government might hope that others will
follow the pop star. It already has a “golden
visa” scheme—which gives investors the
right of residence—and offers highly
skilled migrants tax breaks. A new scheme,
launched on July 22nd, tries to lure back
emigrants, even if they are neither highly
paid nor highly skilled.
The Regressar (Return) programme is
aimed at former residents who have lived
outside Portugal for at least three years and
are considering moving back. Returners
are promised 50% off their income tax bills
for five years. Those who take up jobs in
Portugal receive help with the costs of relo-
cation, such as travel, moving possessions
and re-registering professional qualifica-
tions, up to a maximum of around €6,500
($7,200). Those searching for jobs while
still abroad can sign on with the Portu-
guese employment office.
As the economy was struck first by the
global financial crisis and then by a sover-
eign-debt crisis, unemployment soared, to
17% in 2013. But since then the rate has
dropped below 7%, and companies now
complain that both skilled and unskilled
workers are in short supply. A shrinking
population makes matters worse. Since
2010 it has fallen by 300,000, or 3%. More
than half of the decline is caused by the
number of deaths exceeding that of births.
The rest is because more people left, dis-
couraged by crisis, than arrived. Although
this balance reversed in 2017, the inflow of
migrants has not been big enough to offset
the overall declining trend.
Most Portuguese leavers went to other
parts of Europe, though Lusophone Angola
and Mozambique were also in the top ten
destinations. They are younger and more
skilled than those who left in previous
waves, says Miguel Cabrita, the secretary of
state for employment. That double loss
prompted the scheme to tempt them back.
Though many countries welcome new
migrants with fiscal incentives, attempts
to lure back leavers tend to be limited to
those with large diasporas. China, Malaysia
and Israel offer tax incentives for return-
ers; Spain and Ireland offer help navigating
bureaucracy and modest funding for those
wanting to set up a business.
Portugal’s scheme has already piqued
some interest. Miguel Nuno Cardiga ofbdo,atax-advisoryfirm,sayshehasre-
ceiveda fewinquiriesfromclients(includ-
ingfroma footballplayerwhoisnoteligi-
blefortheexistingtaxbreaks).MrCabrita
says1,800peoplefrom 72 countrieshave
signeduptothejob-searchportal.
Butthedecisiontomovecountryde-
pendsonmorethantaxbreaks.Average
yearlyearningsinPortugalwereapaltry
€12,000in2018,lessthanhalftheeuro-area
average. White-collar workers at multi-
nationalsmighthesitatetomovebackto
Portugaliftherearenocomparablejobs,
saysMrNunoCardiga.Thatmaybechang-
ing.Googleandbmwhaveopenedtech-
supportcentres,inLisbonandPorto.The
moregoodjobs,thebetter:mostmigrants
knowthatit’sa materialworld.^7LISBON
With workers in short supply, can a
new scheme lure emigrants back?Portugal’s labour forceCold hard cash
C
onversations withbankers about the
Democratic primaries invariably turn
to Elizabeth Warren, a senator for Massa-
chusetts. That is not because they like her.
Most would prefer to see the Democratic
ticket headed by Joe Biden, who leads the
polls, or Pete Buttigieg, a business-friendly
mayor from Indiana. They know Ms War-
ren as the candidate who wants to break up
big banks, bring in a wealth tax and make
private-equity firms liable for the debt of
companies they buy. After the crisis of
2008-09 she was instrumental in creating
the Consumer Finance Protection Bureau,
an agency to police shady practices at
banks. “I took on Wall Street, and ceos, and
their lobbyists, and their lawyers,” sheboasted during the second Democratic de-
bate on July 30th—“and I beat them.”
But mutual contempt has bred familiar-
ity. Perhaps surprisingly, bankers are fret-
ting just as much about a candidate who is
a racing certainty to make it onto the ballot:
President Donald Trump.
Wall Street’s finest think they have al-
ready got all they are ever going to get from
Mr Trump. They hoped for two things from
his election in 2016: a big corporate-tax cut
and sweeping revisions to Dodd-Frank, the
post-crisis regulatory bill. They got their
tax cut. And though Dodd-Frank was
tweaked only modestly, they think there
may not be much more to be gained in a
second term.
Those gains came with unexpected
costs. “[Mr Trump] has been terrible for our
business,” says the boss of one of Wall
Street’s famous names. Investment-bank-
ing revenues were hit by a government
shutdown in January, usually a busy time.
The Securities and Exchange Commission,
to which firms must submit documents for
capital-raising, was barely functioning.
Equity-underwriting revenues fell by 25%
year-on-year on average in the first quarter
of 2019 at the five largest investment banks.
Banks generally do well when the econ-
omy is growing, as it is now. But revenues
are harmed by economic uncertainty,
when companies fret about making the
sorts of strategic decisions for which a
banker’s advice may be sought. Many of Mr
Trump’s policies hurt them in this respect,
says another investment-bank boss, for ex-
ample his interference with antitrust poli-
cy and trade antagonism with China.
With Ms Warren in the White House
banks might face tougher regulation. That
would be bad for business, but in ways that
are easy to understand—and which would
harm smaller banks more than the giants.
And bankers reckon that Ms Warren’s more
radical instincts could well be stymied by
political gridlock. “If Elizabeth Warren is
president,” says an executive at one priv-
ate-equity firm, “my first question is: Did
the Republicans keep the Senate?”
A second Trump term is harder to plan
for. The trade war could have knock-on ef-
fects. And Mr Trump might replace Jerome
Powell, the chairman of the Federal Re-
serve, a frequent target of his ire. Mr
Trump’s picks for the Fed’s board have been
unorthodox; a new chairman fitting that
pattern could have a huge effect on bank
regulation and the wider economy.
Faced with the prospect of either four
more years of Mr Trump, or Ms Warren in
the Oval Office constrained by a partly Re-
publican Congress, a surprising number of
bankers would opt for the latter. Still, many
financiers are busy hosting fundraising
dinners for Mr Buttigieg and Mr Biden, in
the hope of putting a more palatable choice
on the menu. 7NEW YORK
What Wall Street thinks of WarrenBankers and 2020Pick your poison
Could be worse