The French are planning to lower taxes on high earners, scrap a levy on financial transactions and build three international schools in a bid to attract bankers from the City of London.
French Prime Minister Edouard Philippe today laid out a raft of measures aimed at boosting Paris’s attractiveness to high finance to cash in on Britain’s exit from the European Union.
Among them are scrapping a plan to widen a current 0.3 per cent tax on financial transactions, eliminating the top income tax bracket, and keeping bonuses out of the calculation of severance pay for ‘risk-takers’ such as stockbrokers.
‘You can regret this (Brexit) decision or welcome it, but it’s a fact,’ said Philippe, speaking on the roof of the Monnaie de Paris – the national mint – with the city’s glass-and-steel La Defense financial district visible in the distance. ‘You have to deal with it.’
In another step aimed at attracting foreign businesses, the Paris area is to open three international high schools by 2022 in addition to the existing six.
Philippe also announced that work had begun to establish an international tribunal in Paris to handle financial cases in English.
Most international financial contracts are written in English and make reference to British law.
Also in the pipeline is the ‘CDG Express’, a rail line linking Charles de Gaulle airport to the city.
French President Emmanuel Macron has pledged to relax France’s rigid labour laws to free its economy from red tape and excessive taxation.
The French financial sector currently represents about 4.5 per cent of national output and employs around 800,000 people.
Paris is competing with Dublin, Frankfurt and other centres for an expected shift in finance jobs out of London as a result of Brexit.
Several banks, especially Asian institutions, have recently announced that they would move European headquarters from London to Frankfurt in response to Brexit.
Bloomberg News said yesterday that it would move investment banking activities from London to its Frankfurt headquarters.
So far Brexit has had a limited impact in Paris, apart from banking giant HSBC’s decision to relocate 1,000 employees from London to the French capital. JP Morgan Chase, for its part, is moving to Dublin, Frankfurt and Luxembourg.
‘At this stage there are no commitments besides HSBC’s,’ said junior finance minister Benjamin Griveaux. ‘We’re working on it. Today is an important signal to investors.’
With Britain at risk of losing the ‘passporting rights’ financial firms use to deal with clients in the rest of the European Union when it leaves, employees in direct contact with customers may need to be based on EU territory in future.
Other jobs will need to move to deal with business that must be booked in the European Union, as will risk management workers, who must be based in the EU to satisfy banking supervisors’ requirements.
The financial transaction tax (TFF), first introduced in 2012, was to have been extended to include ‘intraday’ transactions from 2018.
The decision not to do so angered the Oxfam charity, a major advocate of the tax. ‘They have killed an advance on the TTF and kissed goodbye to extra revenue that could have benefitted the poorest people,’ said Alexandre Naulot, spokesman of Oxfam France.
However the government is maintaining the rate at 0.3 per cent, after a Senate report suggested a reduction to 0.2 per cent.
‘To investors, and to those disappointed by Brexit, I want to say that we are ready to roll out the blue, white and red carpet for you,’ said Paris regional president Valerie Pecresse. ‘Welcome back to Europe,’ she added, in English.
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