ALFIES reviews the five likely European Continental Counterparts that big businesses could look to beyond London following Brexit.
London’s long established reputation as the top global financial city is under threat following the UK’s shock decision to leave the EU.
Whilst global finance house HSBC has kept its headquarters in London, firms like Singapore United Overseas Bank suspended loan applications for London properties and London property snapped up by overseas investors is under threat as domestic buyers pull out.
Deloitte said that London was pulling ahead of New York as recently as March, when it declared that London’s 1.71 million skilled jobs showed that it was growing faster than anywhere else in the world; however, the decision to leave the EU has thrown big businesses and banks into turmoil about where they should relocate staff after Brexit, who may be less able to serve the needs of the European market from outside the EU.
Upside – Emmanuel Macron, the French economy minister, was vocal about Paris “roll out the red carpet” for large finance houses and global businesses that wanted or needed to move in the event of a Brexit. Paris, therefore, may well stand to gain as banks look outside London, especially with the EU keen to prevent the election of the far right during the French presidential elections in 2017.
Downside – Paris would have to make some changes, as it heavily regulates large corporates, which has put many off the French capital; moreover, less than 40 per cent of the French are fluent in English, which makes it less of an attraction to fellow EU migrants.
Upside – Amsterdam is a City that can provide the fertile soil to suggest it can cope with an influx of international businesses. With its beautiful architecture, excellent schools and good night life, 92% of its population speaks English and it has centuries of experience as a global trading centre, making it especially tolerant of newcomers.
Deputy Mayor Kajsa Ollongren, a Dutch politician, told the Dutch daily newspaper following Brexit, that she had already had enquiries from firms about moving to Amsterdam to continue to provide services to mainland Europe.
Downside – a cap on bonuses of just 20 per cent of annual salaries has discouraged some businesses from moving there.
Upside – Frankfurt is home to the European Central Bank, which may give it more power than other European cities, as well as being the financial capital of Germany. Frankfurt Main Finance spokesperson Hubertus Väth, the head of a body that promotes the city as a financial centre, recently told the Financial Times that while Brexit is bad for everyone, Frankfurt could benefit as businesses relocate in Europe.
Downside – A city renowned for its dull lifestyle and lacklustre nightlife and a cultural scene may put employees off relocating making it a harder sell.
4. The city of Luxembourg
Upside – Luxembourg is the second European city to appear on the Global Financial Centres Index, ranked 14th, while London remains in a poll. Multinational companies are continuing to base their European headquarters in Luxembourg with its strong transport links to the rest of Europe and a high quality of life. Several asset management companies have already said they will be focussing more on their Luxembourg base post-Brexit.
Downside – One insider said, the food is tasteless and boring, its population is tiny, the English language television limited and retail and hospitality closes earlier than its European neighbours.
Upside – Although Dublin is further away from its continental counterparts, it low corporate tax rates and its International Financial Services Centre has made it a massive offshore attraction already hosting half the world’s top 50 banks and 30 of the largest internet businesses.
Downside – The Irish Government will need to convince businesses that the benefits of Dublin outweigh moving even further away from the continent to a place with poorer transport links than London.
Has London Lost? We feel that London will keep its title as the most important global city in Europe. It has always been and is likely to continue to be a major international financial centre, but what is clear is that there will be an inevitable contraction as some businesses choose to move abroad.
What are your thoughts and have your own firms or businesses chosen to make a move?