London can lure Brexit-fleeing banks back to UK – but the City must move quickly

Many banks fled to Paris in the wake of Brexit but are now in full-scale retreat. The City should move quickly to lure them back, says Matthew Lynn

France, Paris, La Defense, modern office buildings in daytime
(Image credit: Getty Images)

When the UK voted to leave the European Union, French president Emmanuel Macron devoted a huge amount of energy to luring banks across the Channel.

He quite rightly saw an opportunity for his country.

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Now, it is in full-scale retreat. None of the major banks are going to come out with a big public statement that they are leaving France – it’s not worth the political controversy.

The budget is still in flux, but it includes a corporate tax surcharge of between 3% and 9% for companies with more than €1 billion in revenue and an extra levy on anyone making more than €250,000 a year.

The Senate has voted in favour of a new wealth tax, and even if that does not pass, the government is planning a “minimum tax” that would be much the same thing.

One thing is clear: the days when Macron, himself a former investment banker, could cut sweetheart deals with finance are in the past. France wants to tax the rich, and bankers can’t expect any special favours. They’re a target.

How the City can grab the opportunity

There is an opportunity here for the City – it should start tempting those bankers back.

When London was in trouble after Brexit, France aggressively targeted the banks. Now that the tables have been turned, we should be just as aggressive in trying to lure them back.

Sure, some trades still have to be made within the EU to comply with its rules, but many of the other executives and traders can be based anywhere, and London remains the pre-eminent trading and financial hub in Europe and the obvious alternative to Paris.

There are plenty of things that the City, working with the government, could do.

It could redraft the rules on non-doms (people who live here but are not registered as residents for tax purposes) so that finance workers are given an exemption from British taxes for five years.

It could tweak the windfall tax on banks to exempt any institution or office moving from France to London. Or it could offer a lighter-touch regulatory regime for any bank making the switch.

It could also start making a forceful case, using investment summits and promotional tools, to argue that London is now a more attractive place to base a financial business and that bankers are still welcome in the City.

The opportunity is there for the taking. If the City doesn’t grab it, another European financial centre will.


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Matthew Lynn

Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years. 

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.