France pitches Paris as Europe’s main financial hub post-Brexit
Date created : Latest update :
The French government pledged on Wednesday to make its tax regime for expatriates the most favourable in Europe in a landgrab for London banking business displaced by Britain's decision to quit the European Union.
"We want to build the financial capital of the future," Prime Minister Manuel Valls said at a hastily arranged visit to the annual conference of France's financial industry lobby Europlace. "In a word, now is the time to come to France."
France's financial sector has often complained of government ambivalence towards the industry, which is subject to high taxes and sometimes hostile remarks from politicians.
But Paris sees an opportunity in last month's Brexit vote, the regulatory implications of which place a huge question mark over London's place as the centre of Europe's banking business.
"We are bringing solutions today to companies that are asking questions and expecting answers to prepare for the future," Valls said to enthusiastic applause from the audience of senior bankers and finance chiefs.
France offering favourable tax regime
He said France's already favourable tax regime for expatriates and French nationals returning from stints abroad would in future be applicable for their first eight years in France, up from five currently.
The scheme includes deductions for non-salary perks like employers paying for employees' children's school fees and for revenue earned on capital held abroad.
Valls said the government would also set up a one-stop administrative point for foreign firms seeking a foothold in France with service in languages other than French.
Meanwhile, for the benefit of expat families, schools would open as many classes for foreign children in their native language as necessary.
Paris 'has everything'
For his part, Bank of France governor Francois Villeroy de Galhau promised French regulators would quickly examine applications from any financial institutions licensed in Britain that might seek to set up shop in France.
"We are not in a war with London... but there is competition and we want to make Paris Europe's top financial centre," the head of the wider Paris region, Valerie Pecresse, told bankers.
"Paris is not the only financial center in the euro area, but it has everything it needs to be one of the best," De Galhau added.
Though often neglected in the past, the industry's proposals for making Paris more attractive internationally are no longer falling on deaf ears.
Socialist President François Hollande said last week tax regulations needed to be adapted to make Paris more attractive, in a stark contrast to his description of the finance industry, his main enemy during his 2012 election campaign.
Finance Minister Michel Sapin turned the tables on outgoing British Prime Minister David Cameron, who had offered to "roll out the red carpet" for French firms when Hollande took office in 2012. The day after the Brexit vote, Sapin told reporters: "The red carpet can be used both ways".
Separately the chief executive of the French Banking Federation, Marie-Anne Barbat-Layani, called on the government at a business conference in Aix-en-Provence to be more active in trying to attract UK-based financial firms seeking to relocate.
Paris is already the biggest centre for many markets in the euro zone, including corporate bond issuance and investment management, with €3.6 trillion of assets under management.
Other financial centres in the 19-country currency bloc got an early start on Paris in lobbying London financial firms ahead of the vote on Britain's EU membership vote last month.
Milan's new centre-left mayor, Giuseppe Sala, met with Andrea Enria, chairman of the European Banking Authority on Wednesday, to urge the London-based EU watchdog to choose Italy's financial capital as its new home given it was highly likely it would have to leave Britain.
Milan joins the scramble
Milan is also vying to attract another London-based EU body, the European Medicines Agency. Sala said his home city can offer excellent air transport links, cheaper offices and homes, and potential tax incentives.
Madrid said on Monday it was considering granting tax breaks to attract banks and international firms looking to move operations away from Britain after its vote to leave the European Union.
France and other EU countries argue that British financial firms should not be able to keep the "passport" which allows them access to EU markets unless Britain accepts the free movement of people, which Brexit campaigners oppose.
"There can be no cherry-picking and no free-riding," underscored the Bank of France's De Galhau.
Firms considering leaving UK
Many multinationals that have chosen the UK as a base for operations are expected to reconsider some of their operations in Britain due to Brexit in the months to come.
Pre-Brexit, Citi's UK head James Bardrick warned that if the UK left the EU: "We would have to operationally change the business and reallocate certain businesses back into the EU. That's not technically impossible ... but enormously costly and enormously inefficient ... and will mean the scale of our activities here will reduce."
Vodafone - the seventh-biggest company on the FTSE 100 with a stock market value of more than £55 billion - has also indicated that it is also considering moving its group headquarters. The company said EU membership had been an important factor in its growth, and that free movement of people, goods and capital were integral to any pan-European business.
"Brexit could mean fewer JPMorgan jobs in the UK and more jobs in Europe," said JP Morgan CEO Jamie Dimon.
Ryanair CEO Michael O'Leary said, "The longer-term effect though is we will invest less in the UK - we will certainly switch some of our existing UK investment into other European countries."
Fitch ratings agency also suggested US banks could relocate jobs from London to Ireland and the Netherlands.
(FRANCE 24 with AFP, AP, REUTERS)