London

Mayor fears threat to London from rival European cities

Frankfurt skyline Image copyright Getty Images
Image caption Frankfurt is one of several European cities trying to woo businesses in the wake of the UK's European Union referendum result

The mayor of London has warned of the growing threat of foreign cities trying to steal business from the capital, one month on from the EU referendum.

Sadiq Khan said there was real concern among business leaders that companies could leave the City.

It comes as the mayor of Frankfurt told BBC London his city's "arms and our doors are open".

London-based financial technology firm Transferwise said it had been courted by several European countries already.

The company's chief executive Taavet Hinrikus said his company was being courted by Ireland and Switzerland among others.

A spokesman for Transferwise, which processes international currency payments, said moving away from London was "not something the firm was actively talking about".

The spokesman added that Transferwise had chosen to make its base in London and that the company "hoped it could make that work".

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Media captionLondon mayor: Business leaders worried about losing access to single market

But he added that businesses needed greater certainty in order to operate successfully.

Mr Khan told BBC London there was genuine concern among leading figures in the City he had spoken to, including Bank of England governor Mark Carney and London Stock Exchange chief executive Xavier Rolet.

"There is a concern that if we don't have access to the single market, if we haven't got passporting of financial services, that could lead to businesses leaving London to go to those cities where there is access to the single market," he said.

The latest government figures estimate the FinTech industry - financial technology - generates about £20bn in annual revenue.

And Mr Khan said it was just one industry being targeted by other European centres.

"The mayor of Milan was here this week, I met with him, Why was he here? He wants to pinch our business. Who can blame him?

"The mayor of Paris and the deputy mayor have already said they're rolling out the red carpet to invite businesses to come to Paris. Why wouldn't they?"

Dublin-based investment group IDA Ireland is planning an advertising campaign in the autumn highlighting Ireland's tax regime, its proximity to London, and the shared language to businesses thinking about relocating.

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Media captionMayor of Frankfurt: If you want to become rich, come here

Analysis: Karl Mercer, BBC London political correspondent:

Peter Feldmann has had a busy few days. Frankfurt's lord mayor has been celebrating the birth of his second daughter on Monday night.... and who knows perhaps a new lease of life for his city too.

He greets us in the grand surroundings of the Kaiser Hall in Frankfurt's equally grand City Hall and can barely contain his smiles.

Opportunity, he believes, has come knocking with the UK's decision to leave the EU.

"Our arms and our doors are open," he tells me when it comes to London businesses big and small that are looking to relocate.

At a business meeting the day after the Brexit vote, people cheered and clapped him saying: "here is the winner from Brexit".

In the coming weeks his team will fly to London to make their case. Frankfurt already has a video selling its wares and a team of English speakers taking calls from businesses.


Mr Khan told the BBC: "London is open: we're open for talent, we're open for business, we're open for investment. The government has got to help me do my job as mayor to make sure that we send that message out loud and clear around the country, around Europe and around the world.

"We've got competitors who want to pinch that business, we've got competitors who want businesses to go to their cities. We cannot allow that to happen."

Business and Energy Secretary Greg Clark said giving businesses the certainty they need to plan for the future is a "key priority".

"That's why we are working closely and collaboratively with businesses across all sectors to ensure that the UK remains the best place in the world to do business," he said.

A minute after the Brexit vote was announced Frankfurt launched a website and phone line in a bid to encourage businesses that want to remain in the single market to relocate there.

The mayor of Frankfurt, Peter Feldmann reiterated that invitation on Thursday, telling BBC London: "If you want to become rich, if you want to stay wealthy, you should have a [department] in Frankfurt.

"If you want to become isolated and see from a binocular perspective what is going on in the world, stay in London."

Image copyright Getty Images

Meanwhile, German business development group Berlin Partner said earlier this week that at least 10 London start-up firms had made enquiries about moving to Berlin since the UK voted to leave the EU last month.

Berlin is attempting to woo London's FinTech industry and, like Frankfurt, has stepped up efforts to promote itself as a more affordable and creative alternative to other cities.

At London's FinTech conference earlier this week, Berlin Partner director Stefan Franzke said: "The most concrete enquiries are coming from London FinTechs. They are considering a move to Berlin so as not to lose access to the European single market."

Berlin's senator for economics, technology and research, Cornelia Yzer, has sent hundreds of letters to UK businesses and earlier this week travelled to London Fintech Week to lobby start-up founders.

She told BBC London: "We are an international community and that's why companies will find talents there they need. So welcome, and we'll bring all hurdles down, we'll offer programmes for relocation. So pick up the phone talk to me and my team and relocate to Berlin."

More than 100 companies have already been in touch with her team since the Brexit vote, she says, and in September they will open an office in London.

But Mark Boleat policy chairman at the City of London Corporation said he remained confident London would continue to be the world's leading financial centre.

"While some European cities might look to entice businesses and jobs to the continent, we have so many strengths which make us such an attractive place to do business," he said

"Highly skilled workers, excellent infrastructure and a stable regulatory system are but some of those, and crucially the capital is a place where people want to work and live."

Asked whether London had been ill prepared for the Brexit result, Mr Khan said that was now important was that London now dealt "with the hand that we've been given".

Mr Khan said it was "really important that we explain to the government it's in the country's interest for them to listen to us."

"Uncertainty isn't helping."

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