France steps up effort to woo London banks planning Brexit move

Government aims to make Paris more attractive with lower taxes, lighter regulation and new international schools

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 including 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.

Courtesy Theguardian