Paris has been a rival city to London as a financial centre
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Paris enjoys advantages to become a European financial center because it already has many banks and financial experts and offers reasonable rent. The Paris administration intends to expand the city and build more international schools to attract bank leaders and their families. But its tax of 75% on annual incomes of above 1 million euros and high salaries for skilled workers pose obstacles to investors. Frankfurt, where the headquarters of the European Central Bank is located, and other capital cities with tax incentives like Amsterdam and Luxembourg are also candidates to become European financial centers. This means Paris may need to create more challenges.
On Tuesday, French Prime Minister Edouard Philippe said he would in the next few days announce measures to improve the Paris market including a tax reduction from 33% to 25% and revisions to the Labor Code. France will likely reduce companies’ social contributions, expand incentives for foreign workers, who have been working in France for a long time. French Minister of Economics and Finance Bruno Le Maire said Paris wants to become the destination for financial institutions and banks who are leaving London.
According to the latest statement by Ernst &Young, the UK’s financial sector remains the most attractive in Europe. In 2016, the UK attracted 99 FDI projects, the highest number since 2006. Germany ranked 2nd with 39 projects, and France ranked 3rd with 25 projects. London was ranked as the European capital in terms of investment in finance, and followed by Paris and Frankfurt. Life quality, culture and technology in the UK are the main factors that attract foreign investors.
The distance between London and other financial centers in Europe has been narrowed due to Brexit. Frankfurt surpasses Paris in attracting banks and financial institutions. According to Bloomberg, Frankfurt leads Paris and Dublin in the number of personnel moving from London as banks relocate their bases.
When Britons decided to leave the EU a year ago, ads saying “Please come to Paris” were popular on the Financial Times and the Wall Street Journal.