France steps up efforts to lure London banks to Paris
French authorities on Friday stepped up efforts to attract London banks to Paris after Brexit by pledging to cut labour costs and ensure they do not face tougher regulations than European rivals.
There is fierce competition between Paris, Frankfurt and other European cities to woo the banks based in the City of London financial centre as they consider where to shift some operations to maintain access to the European Union’s single market after Britain leaves the bloc.
Until now, Paris’ rivals, including Frankfurt, Dublin and Luxembourg, have been making the headlines as the locations banks, insurers and asset managers have chosen to open new hubs.
“We are determined to make Paris more competitive and attrac- tive,” Prime Minister Edouard Philippe said, announcing that the government would scrap the highest bracket of payroll tax for firms like banks that do not pay VAT, and cancel a planned extension of tax on share trading. It would also make sure that bankers’ bonuses are no longer taken into account when labour courts decide on unfair dismissal compensation.
The payroll tax France charges banks and some other sectors such as real estate and health care is a charge that companies pay on each salaried employee. It is not levied in most other European countries. Tax was a big concern for London bankers at a roadshow organised by a French finance industry lobby in February this year to promote Paris as a financial centre.
Philippe also pledged to review and change on a case-by-case basis the way EU financial regulations are transposed into French law, saying France had sometimes gone too far by
imposing additional burden on businesses, compared to European rivals.
Germany has said it is looking at making it easier to hire and fire senior bankers in a relaxation of its labour laws to help to attract financial firms to Frankfurt.
President Emmanuel Macron, a former investment banker, has a hard task to convince the investment community that France does not see the financial sector as an “enemy” - a phrase once used by former socialist President Francois Hollande.
As part of the charm offensive, France has pledged to build three more international schools targeted at expatriates’ children in the greater Paris region by 2022.
In a trip to New York last month, Finance Minister Bruno Le Maire said France would set up a special court to handle English-law cases for financial contracts after Britain leaves the EU. For his part, Philippe will next week give a speech to bankers at a conference in Paris, where the chief executive of US investment bank JP Morgan Jamie Dimon is expected to attend, according to the agenda on the event’s website.
The European Central Bank said on June 30 that banks should step up their Brexit preparations, while the Bank of England wants details of financial firms’ contingency plans by July 14.
But Britain is also pushing for a Brexit deal that would allow UK-based finance firms to continue to operate relatively freely in the EU after March 2019, when Brexit is due to take effect.
“We are confident that plans to lower corporation tax to 17 per cent by 2020, (and) a commitment to boost national infrastructure and developing trading relationships with new international partners in the coming years will ensure that London remains a world-leading financial hub,” the City of London said in a statement on Friday.
There is fierce competition between Paris, Frankfurt and other European cities to woo the banks based in the City of London