‘It all depends on the EU talks, but I think Paris can take 10,000 jobs from London’
Brexodus In the first in a series looking at the ways European cities are hoping to cash in on Brexit, Parisian officials set out their stall
The Brexit uncertainy is growing even bigger today Marie-Célie Guillaume French banks no longer have reason to put staff in London Valérie Pécresse After the referendum there was a brutal leap to France Thierry Schimpff It’s a slow earthquake that began on the day of the vote Jean-Louis Missika
Cranes dot the skyline of Paris’s La Défense business district as drills clatter away on the building sites of future skyscrapers containing acres of new office space. Marie-Célie Guillaume proudly walks the route of the guided tours she gives to companies drawing up Brexit contingency plans and considering moving jobs from London after the UK leaves the European Union.
“The uncertainty opened up by the Brexit vote is growing even bigger today,” she says as she takes a lift up France’s highest office building to inspect a luxurious new designer workspace, with treadmill desks and meditation rooms. “We have no clarification of the full timeframe or the conditions of Brexit – and if there’s one thing companies hate, it’s uncertainty.”
Guillaume, chief executive of Defacto, which manages this vast business district that nudges up against the west of Paris, was behind last year’s tongue-in-cheek advertising campaign to lure companies to France post-Brexit: “Tired of the fog? Try the frogs!” Since then she has seen a growing number of inquiries from international firms about the practicalities of a potential move of staff from London.
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 metres of comparatively cheap office space for any company that might decide to relocate staff, 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 looking to the east to win business from London too. She recently travelled to South Korea and Japan to make the case for Paris. “Our target is not just companies that are currently in London,” she says.
“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.
Valérie Pécresse, the head of the Île de France region that surrounds Paris, is addressing business leaders in London today in the latest of several cross-Channel relocation roadshows. She 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 new, more urgent phase of preparing detailed Brexit contingency plans and making decisions early next year.
“Our first target is French banks,” Pécresse says. “With France’s changes to legislation, French banks no longer have reason to put their workers in London.” The ultimate target for the Paris region was to bring 10,000 direct 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,” she says.
Pécresse, a former budget minister under Nicolas Sarkozy and a key figure in the French rightwing Les Républicains party, says there is a lot of “psychology” involved, not least convincing businesses that France is “changing profoundly”. “French Labour laws have been reformed and the wealth tax has been transformed,” she says.
“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 – the most potent challenger being Frankfurt, home to the European Central Bank. The Île de France region estimates from company announcements that about 2,500 jobs are 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. They are among several cities vying to be the new home for the European Banking Authority, which will leave Canary Wharf.
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 greater region said of the Brexodus race: “We’re playing in the same division as Frankfurt.”
France was initially hampered by its image as being politically sceptical about the rich. François Hollande, president before the incumbent, Emmanuel Macron, was elected on a promise that he was “the enemy of finance”, taxes were historically high and the costs of hiring and firing more expensive than in the country’s neighbours.
The prime minister, Édouard Philippe, has promised that “certain weaknesses” have been addressed with the arrival of the centrist, pro-business Macron. He cited reforms that loosened labour laws, 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 wider Paris region, such as streamlining administrative tasks, establishing a Paris-based international tribunal that can hear cases in English, and the construction of three international schools within five years. Crucially for companies which 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 European Union. A hard Brexit would accelerate businesses’ search for alternative bases.
Thierry Schimpff, head of the French union of relocation professionals, the SNPRM, 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 a 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 Brexit is “a slow earthquake – it started the day of the vote and it continues very slowly, but with earthquake effects.”
Main, La Defense in Paris; above, Valérie Pécresse and Clichy mayor Remi Muzeau in his official sash; inset, the French prime minister, Édouard Philippe Main photograph: Charles Platiau/ Reuters