It was not that long ago that Paris was in the running to be the new EU banking capital along with the likes of Frankfurt, Dublin, and Amsterdam. However, after a busy July that saw myriad banks move forward with relocation plans ahead of Brexit, France finds itself on the outside looking in.
Indeed, the country has failed to move the needle and entice any major lenders to its borders even at a time when banks are setting up new units within the EU en masse. Even Amsterdam has emerged as a late entrant to the race, recently welcoming Japanese firms MUFG and RBS.
Labor laws discouraging banks?
France has seen marquee banks shift their focus elsewhere due to a range of factors, perhaps none more than rigid labor laws in the country. The country currently levies harsh labor restrictions in terms of terminations, with a corporate tax rate of 33 percent. However, President Emmanuel Macron has stated that he would like to gradually lower the tax rate down to 25 percent, according to a Bloomberg report.
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Perhaps recognizing its position relative to other European cities, French Finance Minister Bruno Le Maire addressed the situation, stating that Paris still sees itself at the top of the post-Brexit banking hierarchy. Despite behind noticeably behind, he echoed this sentiment:
“We will take the difficult decisions, we will lower French taxes, we will make our country more attractive. We will win the race,” he explained in a recent television interview.
This may be easier said than done with most banks already deciding on their future course in the EU, even at a time when passporting rights and the severity of Brexit itself is still uncertain. However, in the aggregate, Paris is eventually hoping to see upwards of 20,000 new banking jobs in the city. The number was given by the French financial lobby group, Paris Europlace – that number currently surpasses Frankfurt and Dublin combined.
Paris will need more than rhetoric to entice prospective lending operations. The city is competing with other European capitals that have already decided to roll back labor laws to foreign entities in a bid to attract them to their borders. Last month, Frankfurt eliminated several labor checks addressing retention and other measures, which has thus far appeared to pay dividends. The city has to date seen over twice as many banking jobs relocated than Paris.
The vast majority of jobs however are still up for grabs. Many banks have opted to run lean outfits within the bloc with most operations numbering 100 or fewer personnel. As such, there is a healthy margin for bankers that have not yet solidified their relocation plans. For now all Paris can do is hope that it will be at the top of the list.