As London’s financial services industry absorbed the news of yet more property funds closing to redemptions on Wednesday afternoon in the wake of last month’s Brexit vote, and mounting investor concern sent its stock markets falling and its currency to fresh lows, French government officials and bankers were busy promoting Paris as the obvious candidate to succeed the UK capital as Europe’s next financial services centre.
Among the “carrots” they unveiled to lure UK-based executives across the channel was a promise of an income tax break of “up to 50%”, along with the right to exclude foreign properties and assets from France’s wealth tax for eight years, rather than the usual five.
Deductions for non-salary perks, such as school fees for company employees paid by employers, were also mentioned, as were facilities to help non-French businesses get set up in France, according to media reports.
In what observers said was a rare demonstration of unity by France’s politicians and financiers, Manuel Valls, the socialist prime minister of France, detailed these and other incentives Wednesday in an an address to a throng of bankers, journalists and business executives – alongside Valérie Pécresse, a center-right politician who has been spear-heading an effort to lure London bankers to Paris – in a speech which acknowledged the UK’s vote last month to leave the EU, and its implications for Europe’s financial services industry.
For those who might not have been able to make the event, a page on the French Government’s website dated 6 July detailed, in English, “20 facts and figures that show just how much the Île de France region has to offer”. (Paris-Île de France refers to the greater Paris region.)
“As Europe’s second most attractive metropolis after London for foreign investors, Paris-Île-de-France has all the advantages required to take over its economic leadership,” it says.
“With 12 million inhabitants, 944,000 businesses and 646,000 students, Ile de France accounts for 4.6% of EU GDP, making it Europe’s leading economic area.
“The €640 billion of GDP it generates is as much as the Netherlands, and more than Switzerland.”
Also wooing the UK’s financial services industry on Wednesday was an organisation called Paris Europlace, which promotes Paris’s financial services industry internationally. Its annual “Financial Forum” took place on Tuesday and Wednesday, attended by some 1,500 investors, corporate issuers, insurers, bankers and asset managers, and representatives from European and international market authorities.
According to the Wall Street Journal, the prime minister’s invitation to address London’s financial services community was made as part of the Paris Europlace event, and represented the first time a French prime minister had addressed the gathering.
As Paris Europlace explains on its website, the topics addressed at this year’s forum included “the new European perspectives after the UK referendum”.
As reported, Paris Europlace has been promoting Paris as an alternative to London since even before the 23 June referendum. The French prime minister has also spoken on the subject prior to Wednesday’s Paris Europlace event, including in a speech before France’s National Assembly last Saturday. According to to the Reuters news service, he told the Le Parisien daily in an interview: “We know that groups based in the City are planning to leave for Dublin, Amsterdam, Frankfurt and Paris. We are working on measures that could help strengthen our attractiveness…
“To major international companies I say, ‘Welcome to Paris! Come invest in France!'”
Shoe on other foot
Some market commentators have seen some irony in France’s “Bienvenue à Paris” message to London’s banking community, noting that it was not so long ago that London mayor Boris Johnson, on a visit to India in 2012, invited Indian steel tycoon Lakshmi Mittal to decamp to London, in the wake of issues involving his factories in France, by saying “Venez à Londres, mes amis!”
France’s efforts to woo London’s financial services industry on Wednesday came as three UK asset management groups – Henderson Global Investors, Columbia Threadneedle and Canada Life – were announcing that they were suspending trading on their UK property funds. This brought to six the number of such asset managers to have announced, within the past two days, that redemptions from their commercial property funds were being suspended, in response to a surge in redemption requests following last month’s UK vote to leave the EU.
These six funds represent more than half of the the £25bn in the UK Investment Association’s property sector, industry sources noted on Wednesday.