France outlines reforms to woo London jobs post-Brexit
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France’s pro-business charm offensive continued Friday, as the government laid out a series of measures aimed at luring firms leaving London’s financial centre in the wake of Brexit.
Paris has lagged behind other European cities in reaping the bounties of Britain’s post-Brexit uncertainties, in large part because the climate in France is widely seen as inhospitable to business. While the previous president, François Hollande, said he considered the world of finance his enemy, France’s new leader, Emmanuel Macron, a former banker himself, has vowed to make French soil more fertile for firms looking to do business here.
The proposals aim to reduce taxes and some of the regulations in France to bring it more in line with its European peers, and to remove some of the expenses associated with a firm being based in France. While Macron has made overtures to the tech industry and to climate-change scientists in the past, the most recent measures are aimed primarily at banks and financial institutions organisations that are expected to have difficulty operating in London once the UK is no longer part of the European Union.
“To investors, and to those disappointed by Brexit, I want to say that we are ready to roll out the blue, white and red carpet for you," Paris regional president Valérie Pecresse said at an event announcing the plan. “Welcome back to Europe.”
After Brexit, Britain may lose the "passporting rights" financial firms use to deal with clients in the rest of the European Union, meaning that employees in direct contact with customers may need to be based in EU territory in the future. And EU regulations require that certain positions, such as risk management workers, be located in Europe.
Among the propositions laid out by Prime Minister Édouard Philippe is the abolition of the extension of the current tax on financial transactions and the elimination of the top payroll tax bracket. France charges banks and a few other sectors, such as real estate and healthcare, a tax on each salaried employee. That tax is not levied in most other European countries.
Philippe also proposed disregarding bonuses when calculating severance pay for particular types of “risk-taking” workers, such as stockbrokers, thus making it less expensive to lay them off.
Other impediments for firms considering relocating to Paris are linguistic and legal; most international contracts are written in English and refer to British law. Philippe said that work was already under way to establish an international tribunal that could handle financial cases in English.
These measures alone would likely not be enough to make Paris more enticing than Frankfurt or Dublin; its two main rivals in the contest to woo firms relocating from London. At least seven international banks with bases in London have announced they would either move their European headquarters to Frankfurt or open subsidiaries there, and another dozen have said they would move at least some of their operations to Dublin.
So far, Paris has only gained an anticipated 1,000 new jobs, which will come in the form of employees relocated by HSBC. “At this stage there are no commitments beside HSBC’s,” said Benjamin Griveaux, junior finance minister. “We’re working on it. Today is an important signal to investors."
France has some particular disincentives for businesses, including its notoriously inflexible labour laws, which have “seemed to be, if not always the reality, a major deterrent to doing business in France", said Iain Begg, Professorial Research Fellow at the European Institute at the London School of Economics.
Macon has put the goal of reforming those laws and streamlining the nation’s cumbersome bureaucracy at the forefront of his presidency, but it won’t be easy. When the previous administration attempted labour law reform, France was paralysed by sporadic demonstrations for months.
The government also said it would open three new public international high schools in and around the French capital by 2022, in addition to the six that already exist.
(FRANCE 24 with AFP, REUTERS)