In a turbulent global economy, where should the United Kingdom look for an advantage?

Should the country turn towards the United States, now once again led by the mercurial, unpredictable, and tariff-loving Donald Trump? Should it turn instead to its former trading bloc? Or should it cozy up to China and its huge domestic market and state-directed capitalism?

The question of just who will be the UK’s economic port in a storm has once again come to the fore following a bruising few months for Prime Minister Keir Starmer and Chancellor of the Exchequer Rachel Reeves. Labour is now having to see off Nigel Farage and his Reform Party by doing things like committing – in all but name – to the renationalisation of British Steel, the former industrial behemoth now losing £700,000 for every day it is in operation, thanks to its expensive energy inputs and cheap global competition.

The strain on the government’s finances is such that many – including former Labour staff – are predicting Reeves will have to raise taxes in her autumn budget, a move that could further depress the UK economy. Not that there are many bones left to pick clean, what with taxes already being at historic levels, including the new National Insurance rates which are increasing costs for the British businesses who can least afford it.

Will Labour finally consider targeting the capital gains regime, as was rumoured in the run-up to the last Autumn Statement? And if they do, what impact will it have on London and the private capital empires of Mayfair?

There is certainly a moral case to target private equity, even if they, too, are already suffering from the effects of Trump’s global trade war. It is for good reason that private equity has acquired a reputation for asset-stripping and obscene dividend payments. For example, KKR, the American private equity giant, was recently named the ‘preferred bidder’ to inject new equity into the teetering Thames Water. KKR beat out a number of other funds for the honour, including the London-based FitzWalter Capital, an outfit run by ex-Macquarie ‘superstar’ investment banker Ben Brazil. Macquarie, of course, being the fund that did so much to place Thames Water in its current precarious position. Just what Thames Water thinks KKR will do differently is another question.

Like many funds, the Mayfair-based FitzWalter Capital targets ‘distressed’ assets like Thames Water, with Brazil warning of further market ‘reckonings’ to come. FitzWalter should know, given it was created in the midst of the pandemic and all of its related reckonings. Similar to others in the private capital space, FitzWalter keeps a relatively low profile. It wants to be known by the institutional investors and high-net-worth family offices who might invest in its funds, but not by many others. It wants to be known for its returns, not necessarily for how it earns its returns.

And just how does FitzWalter earn its returns? A series of stories last week about a fine a Vietnamese low-cost airline was ordered by the High Court to pay FitzWalter has shed some light on its profit-making tactics. And it’s not pretty.

According to a 2024 High Court judgment, FitzWalter earns its money, in part, by surreptitiously hoovering up the debt of unsuspecting airlines – in this case, VietJet – and then declaring a ‘termination event.’ This allows FitzWalter, it maintained in court, to claim all of the unpaid money from the specified lease period for purchasing the aircraft, as well as taking the asset itself at the heart of the dispute – i.e., the plane – in order to resell it. In other words, FitzWalter was able to spin a few million in missed loan payments during the pandemic into a potential payday worth hundreds of millions of dollars. Nice work if you can get it.

And what qualifies as a ‘termination event’? Well, that’s one of the questions at the heart of the dispute in which VietJet has been granted the right to appeal. The minutiae are complicated but the essence of the problem is this: What do you do when a company you’ve never heard of or dealt with shows up and says it now owns some of your planes? Acquiesce? Or fight like hell?

One can only assume VietJet was working to reschedule all of its lease payments with all of its lenders at the time, none of whom appear to have been pursuing a similar course as the lenders BNP and Natixis were in this case with FitzWalter. Nor would it really come as a surprise that an airline would be working to conserve as much of its available cash as possible, either, what with the pandemic happening around it. Nobody knew when it was going to bloody end!

Not that it’s any consolation to VietJet, but it wasn’t the only airline targeted by FitzWalter Aviation during the pandemic. It wasn’t even the only Vietnamese airline. A pair of Vietnam Airlines A350s were also subjected to what appear to be the same procedures, as described by another set of court documents, this time from the United States, where the owners of the leases were able to resist the unwanted FitzWalter approach by filing for Chapter 11 and organising a parallel sale. The Japanese owner of the aircraft in that particular case called FitzWalter’s tactics “hyper-aggressive and wholly inappropriate.” No kidding, as the Americans would say.

Busting into complicated aircraft financing arrangements is the kind of ‘clever’ wheeze only a Mayfair-based finance whiz could dream up, the kind of play that undoubtedly earned Brazil his reported $9.6 million a year before leaving Macquarie in 2018. Perhaps it’s even why he was called the ‘brains’ of Macquarie. But is it the kind of clever we should be rewarding as a society, whether morally, or with preferential tax treatment?

Sharp practices in the quest for good returns is good for those wealthy enough to invest, but at what cost to the ‘real’ economy? Are we really looking to punish apparently well-run companies that facilitate low-cost holidays for ordinary people, all so a few already-wealthy people can exploit pandemics to make even more money?

Perhaps it really is time for Rachel Reeves and Labour to bring down the hammer of a capital gains tax.