The French finance Minister Bruno Le Maire said Paris will beat Frankfurt to become the European Union’s main financial centre after Britain leaves, even as he acknowledged that the French capital is playing catch-up.
“We will take the difficult decisions, we will lower French taxes, we will make our country more attractive,” Mr Le Maire said in Paris. “We will win the race.”
Since the UK voted last year to abandon the EU, France has been fighting with Germany, Spain, Holland, Irelandand other EU countries to grab a part of the financial industry that plans to relocate out of London. But stiff rules on firing workers, high and volatile taxes have marred French efforts - it is only five years since François Hollande came to power declaring that financiers were his enemies and slapped on a 75 per cent rate for top earners.
As a result, Frankfurt has already won about twice as many relocation commitments from major banks as Paris has seen.
Mr Le Maire announced late last month that he will scrap a tax on financial transactions next year, saying it was a deterrent to banks considering a move to Paris. The French president Emmanuel Macron has also pledged to gradually cut the corporate-tax rate to 25 per cent by the end of his term in 2022 from its current level of 33 per cent. The government is also boosting funding for more bilingual schools to make it easier for expatriates to adapt to French life.
Paris is hoping to lure 20,000 jobs from the UK as firms seek EU locations to secure continued market access to the bloc, according to ParisEuroplace, France’s main financial lobby group. France is also bidding to make Paris the new home of the European Banking Authority, arguing that it can offer stability and continuity.
HSBC, which has a French retail bank, has said it may relocate as many as 1,000 traders to the French capital, while banks including Standard Chartered and Nomura have picked Frankfurt. Deutsche Bank is preparing to move large parts of the trading and investment-banking assets it currently books in London also to Frankfurt, its hometown. Paris ranks 29th on the ranking of Global Financial Centres Index by Z/Yen Group, just above Casablanca and behind Munich. London tops the list, followed by New York and Singapore.
“Many banks, many investors, should be aware that France is changing,” Mr Le Maire said, citing Paris Saint Germain’s world-record signing of the Brazilian football star Neymar this week. “Tomorrow, France will be the place to be. Not just for Mr Neymar, but for all investors.”
* Bloomberg