Paris rolls out measures for post-Brexit finance
French Prime Minister Edouard Philippe on Friday laid out a raft of measures aimed at boosting Paris’s attractiveness to high finance to cash in on Britain’s exit from the European Union. Among them are scrapping a plan to widen a current 0.3 percent tax on financial transactions, eliminating the top income tax bracket, and keeping bonuses out of the calculation of severance pay for “risk-takers” such as stockbrokers.
“You can regret this (Brexit) decision or welcome it, but it’s a fact,” said Philippe, speaking on the roof of the Monnaie de Paris-the national mintwith the city’s glass-and-steel La Defense financial district visible in the distance. “You have to deal with it.” Paris regional president Valerie Pecresse said, for her part: “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.”
Switching to English, she added: “Welcome back to Europe.” In another step aimed at attracting foreign businesses, the Paris area is to open three new international high schools by 2022 in addition to the existing six. Philippe also announced that work had begun to establish an international tribunal in Paris to handle financial cases in English. Most international financial contracts are written in English and make reference to British law.
Also in the pipeline is the “CDG Express”, a rail line linking Charles de Gaulle airport to the city. French President Emmanuel Macron has pledged to relax France’s rigid labor laws to free its economy from red tape and excessive taxation. The French financial sector currently represents about 4.5 percent of national output and employs around 800,000 people.
Paris is competing with Dublin, Frankfurt and other centers for an expected shift in finance jobs out of London as a result of Brexit. Several banks, especially Asian institutions, have recently announced that they would move European headquarters from London to Frankfurt in response to Britain’s departure from the EU. Bloomberg News reported Thursday that Deutsche Bank was moving investment banking activities from London to its Frankfurt headquarters. So far Brexit has had a limited impact in Paris, apart from banking giant HSBC’s decision to relocate 1,000 employees from London to the French capital. JP Morgan Chase, for its part, is moving to Dublin, Frankfurt and Luxembourg.
‘Not easily replicable’
“At this stage there are no commitments besides HSBC’s,” said junior finance minister Benjamin Griveaux. “We’re working on it. Today is an important signal to investors.” With Britain at risk of losing the “passporting rights” financial firms use to deal with clients in the rest of the bloc, employees in direct contact with customers may need to be based on EU territory in future.
Other jobs will need to move to deal with business that must be booked in the EU, as will risk management workers, who must be based in the bloc to satisfy banking supervisors’ requirements. Reacting to Philippe’s announcement on Friday, Miles Celic, head of Britain’s main financial lobby, TheCityUK, said the British financial sector cannot be “quickly or easily replicable in other centres”.