France steps up ef­fort to woo Lon­don banks plan­ning Brexit move

The Star (St. Lucia) - - BUSINESS -

France has stepped up its se­duc­tion of banks and other fi­nan­cial in­sti­tu­tions con­sid­er­ing a move out of Lon­don due to Brexit, as the gov­ern­ment un­veiled a raft of pro­pos­als aimed at mak­ing Paris more ap­peal­ing.

A doc­u­ment pre­sented by the French prime min­is­ter, Édouard Philippe, on Fri­day listed re­forms he said could turn Paris into “Europe's lead­ing fi­nan­cial cen­tre af­ter Brexit” amid fierce com­pe­ti­tion from Dublin, Frank­furt and Lux­em­bourg.

The pro­pos­als in­clude 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.

Bankers' bonuses will no longer be con­sid­ered when labour courts de­cide on un­fair dis­missal com­pen­sa­tion un­der the pro­pos­als, eas­ing the cost of labour dis­putes for French fi­nan­cial in­sti­tu­tions.

The doc­u­ment also pledged to change the way EU fi­nan­cial reg­u­la­tions are ab­sorbed into French law to make sure red tape is not more bur­den­some than in other coun­tries.

Paris is com­pet­ing against ri­val fi­nan­cial centres such as Frank­furt and Dublin for jobs that move out of Lon­don due to the fall­out from Brexit.

One of its largest ob­sta­cles is the ease of do­ing busi­ness in English for in­ter­na­tional staff, a hur­dle that the pro­gramme of re­forms laid out on Fri­day will also ad­dress.

Philippe an­nounced that the gov­ern­ment has be­gun work on es­tab­lish­ing an in­ter­na­tional tri­bunal in Paris that can han­dle cases in English, the lin­gua franca of the fi­nan­cial world.

There will also be three new in­ter­na­tional schools in the Paris area by 2022, in a move ap­par­ently aimed at bank­ing staff con­cerned at mov­ing their fam­i­lies to France.

The pack­age of mea­sures chime with prom­ises by France's new cen­trist pres­i­dent, Em­manuel Macron, to loosen the coun­try's labour laws and do away with red tape and high tax­a­tion.

The early days of the for­mer in­vest­ment banker's ten­ure have set a markedly dif­fer­ent tone to his pre­de­ces­sor François Hol­lande, who once re­ferred to the fi­nan­cial sec­tor as the “en­emy”.

Paris al­ready has its eye on tens of thou­sands of bankers who could move away from Lon­don, if the UK's di­vorce from the EU proves to be the cat­a­lyst for an ex­o­dus.

Among the fac­tors that could af­fect this is the po­ten­tial loss of Bri­tain's “pass­port­ing rights” al­low­ing in­ter­na­tional fi­nan­cial firms ac­cess to mar­kets in the EU.

But Cather­ine McGuin­ness, pol­icy chair­man at the City of Lon­don Cor­po­ra­tion, cast doubt on how much busi­ness ri­val fi­nan­cial centres could poach from the cap­i­tal.

She said: “Lon­don is the world's lead­ing fi­nan­cial cen­tre thanks to the breadth and depth of the bank­ing and other in­sti­tu­tions clus­tered here, its com­pet­i­tive tax rates, strin­gent reg­u­la­tory regimes and close prox­im­ity to other ma­jor fi­nan­cial centres.

“Its growth has helped the rest of Europe pros­per. It's un­der­stand­able that Euro­pean com­peti­tors will try to lure firms into mov­ing jobs away from Lon­don.

“How­ever, we are con­fi­dent that plans to lower cor­po­ra­tion tax to 17% by 2020, 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 Euro­pean Cen­tral Bank said last month that banks should speed up Brexit prepa­ra­tions, while the Bank of Eng­land wants to hear fi­nan­cial firms' con­tin­gency plans by 14 July.

In the mean­time, the UK is seek­ing a deal that would al­low firms based in Bri­tain to op­er­ate freely in the EU af­ter Brexit, sched­uled to take ef­fect in March 2019.

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