French capital is tempting firms from London in seeking to profit from the UK’s exit from the EU.
La Défense, Europe’s largest business district, happens to be in a building boom just as Paris itself races to construct new office buildings amid a massive extension of the public transport system. The business district is ready with hundreds of thousands of square meters of comparatively cheap office space for any company that might decide to relocate staff from London, particularly if Brexit means the loss of London’s “passporting rights”, which allow international financial firms access to EU markets.
London businesses and financiers are playing a waiting game on the exact terms of Brexit, and are under pressure to take decisions early next year. But Guillaume is also looking to the east to win business from London. She recently travelled to Korea and Japan to make the case for Paris. “Our target is not just companies that are currently in London,” she said. “Until now Asian firms setting up in Europe immediately chose London without a moment’s thought. Now it’s clear that they are hesitating between Germany and France.”
Paris has markedly stepped up its pace in the race among European cities to corner the “Brexit relocation” sector. That has been noted by the chief executive of Goldman Sachs, Lloyd Blankfein, who praised Paris pointedly in a tweet on Tuesday – raising specualtion that the city could benefit from changes to the bank’s London operations after Brexit.
Valérie Pécresse, the head of the Île de France region that surrounds Paris, was addressing business leaders in London on Tuesday in the latest of several relocation roadshows. But the phase of broad selling points has moved on. Instead, Pécresse brought a vast team of technical experts to answer companies’ very precise questions – from tax to labour laws, visas or the price of office rents – as businesses enter a more urgent phase of preparing detailed Brexit contingency plans and making decisions early in 2018.
“Our first target is French banks,” Pécresse said. “With France’s changes to legislation, French banks no longer have reason to put their workers in London.” She said the ultimate target for the Paris region was to bring 10,000 jobs from London by 2019. “Of course, everything depends on the negotiations in Brussels. If, as seems to be panning out, the negotiations lead to the withdrawal of financial passporting from the UK, I think Paris can gain 10,000 direct jobs.”
Pécresse, a former budget minister under Nicolas Sarkozy and a key figure in the right wing Les Républicains party, said there was a lot of “psychology” involved, not least convincing businesses that France is changing profoundly.
She said: “French Labour laws have been reformed and the wealth tax has been transformed. So the message is that France is reformable and there is a new state of mind. I think a lot of positive messages have been sent and there is not a single person left in the City of London who thinks France is the enemy of finance.”
The French capital is in competition with several other EU cities, and the most potent challenger is Frankfurt, home to the European Central Bank. The Île de France region estimates from company announcements that about 2,500 jobs are already earmarked to move to the Paris area from London. They include staff from HSBC bank and at least 300 traders and support staff from Bank of America. But Frankfurt is ahead, with more than 3,000 jobs already destined for the German financial centre.
So far, of 50 companies that have consulted the Paris region’s hotline and dedicated Brexit relocation advisers to discuss potential moves, 11 have taken action to locate jobs in France.
Officials in the Paris region said of the Brexodus race: “We’re playing in the same division as Frankfurt.”
France was initially hampered by the country’s image as politically skeptical of the rich. The last president, François Hollande, was elected on a promise that he was “the enemy of finance”, taxes were historically high and costs of hiring and firing more expensive than France’s neighbors.
The current prime minister, Edouard Philippe, has promised that “certain weaknesses” have been addressed with the arrival of the centrist pro-business president Emmanuel Macron. He cited reforms that loosened labour laws, making it easier to hire and fire, the scrapping of France’s wealth tax and its transformation into a property tax, the abolition of the highest bracket of a payroll tax levied on each salaried employee and the cancellation of plans to increase France’s 0.3% tax on financial transactions.
Coupled with this are major efforts being made by Paris and the widerregion, such as streamlining administrative tasks, establishing an international tribunal that can hear cases in English and the construction of three international schools by 2022. Crucially for companies who pay their employees’ school fees, these French state international schools, with bilingual classes, will be free.
For French officials, all depends on the UK’s negotiations with the EU. A hard Brexit would accelerate businesses’ search for alternative bases in Europe.
Thierry Schimpff, head of the French union of relocation professionals, said: “Just after the Brexit referendum result, we noticed a brutal leap in moves from the UK to France by both families and companies. Now there’s a waiting period to see what happens in the negotiations. Some are wondering whether Brexit will happen, others are making plans to leave, concerned about hard Brexit. It feels like we’re in the dark and everything is up in the air.
Jean-Louis Missika, the Paris deputy mayor in charge of economic development, said there were indications that French expatriates were returning to France, and other evidence suggests some scientists are considering quitting London for Paris. Brexit, he said, is “a slow earthquake – it started the day of the vote and it continues very slowly, but with earthquake effects”.
Source: the Guardian