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


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.
Many financial firms are required to trade within the EU, and with its depth of expertise, vibrant culture and good schools, Paris was a natural alternative to Britain.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Special tax deals were on offer, along with exemptions from onerous employment laws and even regulations in English instead of French. Macron rolled out the red carpet.
To some degree, that worked out well. The finance industry added 25,000 jobs from 2017 to 2023, according to the French National Institute of Statistics and Economic Studies.
Morgan Stanley raised its head count in the city from 150 to 450; Goldman Sachs from 170 to more than 400; JPMorgan from 250 to almost 1,000.
Far more than Frankfurt, its main rival, Paris started to emerge as the main eurozone trading hub, with all the wealth and tax revenues that it can generate. It was a smart strategy, and it was starting to work.
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.
Instead, they are just slowly scaling back, freezing hiring and winding down contracts. It is not hard to understand why. With a caretaker government facing a fiscal crisis and with borrowing stuck at more than 113% of GDP, taxes are going up.
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.
Neither are huge sums in the banking or hedge-fund industries and many may be caught out by the new rules.
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.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
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.
-
Can I shield my ISAs from inheritance tax?
Many investors and savers will be wondering if there’s anything they can do to protect their ISAs from inheritance tax, especially as pensions will become liable for the levy from April 2027. We reveal the options available to ISA customers
By Ruth Emery
-
What is the average salary by age – and how do you compare?
Are you making more than your peers? We look at the average salary by age to see how much the typical Brit earns at different stages of their life
By Daniel Hilton
-
Supersonic travel: How China could 'leapfrog' US and Europe's commercial aviation industry
Opinion Innovation in commercial aviation has been stuck for 60 years. A commercial supersonic jet might be back on the market soon, but will China get there first?
By Matthew Lynn
-
How British businesses can tackle Trump's tariffs
The majority of British businesses are likely to take a hit from the chaos caused by Trump’s tariffs to reorder global trade. Companies in the firing line face some difficult decisions, says David Prosser
By David Prosser
-
Trump wants to colonise Mars – will it happen?
Donald Trump wants to plant the US flag on Mars. Could humans really live there?
By Simon Wilson
-
A new wealth tax is a terrible idea. The rich are already being hit by sneaky taxes – Merryn Somerset Webb
Opinion Ideologues want to squeeze more tax out of the rich with a wealth tax. They’re already wrung dry, says Merryn Somerset Webb
By Merryn Somerset Webb
-
Why are energy bills so expensive in the UK?
Electricity bills in the UK are higher than in any comparable rich country. Some blame the net-zero zealotry of the government for that. What is really to blame for high energy bills?
By Simon Wilson
-
Will Putin invade Europe? Why investors know Russia is a paper tiger
Opinion Markets are right to ignore talk of Putin invading Europe, says Max King.
By Max King
-
Why French far-right leader Marine Le Pen has been banned from running for office
Marine Le Pen, presidential candidate and leader of France's right-wing National Rally party, has been barred from standing by the country's judges.
By Emily Hohler
-
Five years on: what did Covid cost us?
We’re still counting the costs of the global coronavirus pandemic – and governments’ responses. What did we learn?
By Simon Wilson