Paris tries to seduce the City

  • 6 February 2017
  • From the section Business
  • comments
The Eiffel Tower is seen in front of the Sacre Coeur Basilica on Montmartre Image copyright Reuters

"When was the last time you thought of taking your partner for a nice weekend in Frankfurt?".

That was one of the more memorable lines of a heavy sales pitch from politicians and business leaders from Paris. A raiding party touched down in London this morning determined to cart off billions in business and tens of thousands of jobs to the French capital in the weeks and months ahead.

Valerie Pecresse - President of the region including Paris and its environs, and a former budget minister under Nicolas Sarkozy - led the party, and told a group of senior finance executives from heavyweights such as Blackrock, Goldman Sachs and Credit Suisse why Paris was the natural choice for any business they moved out of London.

To be fair to Mme Pecresse, the brochure she presented had more to it than Paris being très agréable. She described the competition for London business as fierce and came armed accordingly.

A 28% top rate of income tax for expat executives for a period of eight years (recently extended from five). That compares to a top rate of 45% in the UK.

Commercial rents one-third the price of London - with millions of square feet currently unoccupied.

A deep pool of talent - a lot of which, she joked, is currently in London.

Two international schools and a plan for two more near the business areas of Paris.

Image copyright PA
Image caption Some companies in the City of London have already said staff may have to move abroad

Four of the six biggest continental European banks are French and based in Paris.

The brochure was glossy and the tone was friendly - apart from the odd sideswipe at arch rival Frankfurt. But there were two issues the political and business leaders from across La Manche struggled with.

Bankers I spoke to afterwards said that one big turn off remains how difficult it is to fire people in France. That really matters for banks. As their staff are so well paid, when business slumps they need to reduce their biggest cost - people - quickly. Working in finance is profitable but it can be brutal.

The other issue was politics.

The delegation arrived on the same day as the man who thought he would be president, Francois Fillon, was fighting for his political life after paying his wife over half a million euros for work she may or may not have done.

Economic nationalism, the political wind that many say secured Brexit and the Trump presidency, is packing a punch in France with Marine Le Pen promising French jobs for French workers. Tax breaks for rich expats and looser employment protection sit uneasily with those priorities.

Image copyright Reuters

The future of the UK's relationship with the EU is maddeningly vague to most business leaders, but if it's political uncertainty you don't like - why would you ever pick France?

Madame Pecresse and her entourage insisted that the political uncertainty would be gone after the elections on 7 May. She said she was convinced that whoever was in charge, "HE"(sic) would be pro-business.

The same folks who told us Donald Trump couldn't win and that Brexit would never happen agree with her.

One member of the raiding party told us why the pundits were right about France. Jean-Louis Missika, the Deputy Mayor of Paris for economic development, told the BBC that "because France has embraced globalisation with more care for our workers, the backlash will be less severe".

The Parisian ambition is to tempt 10,000 direct employees and further 20,000 indirect employees to Paris. When bankers move, they tend to take law, accounting, office management, sandwich making and dry cleaning jobs with them.

Those are pretty modest ambitions when you consider over a million people work in financial services in the UK - a third of them in London. Modest, but perhaps realistic. The good news for Paris is that they are already 10% of the way there.

HSBC has already said it will move 1,000 jobs to Paris.

It seems unlikely they will be the only newcomers to succumb to its charms.

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