Thursday, February 23, 2017
Brexit and financial centers: Picking up the pieces
Britain's vote to leave the European Union came as a shock and disappointment to many of the other EU nations. However, with the early stages of the exit beginning next month, many are wondering where the financial institutions are going to move to. France, Germany, Ireland, Luxembourg and the Netherlands are all competing for some of the financial institutions to move their respective areas.
Many of these countries have their positives and negatives. France is pushing hard to attract financial institutions and change their image as "interventionist, high tax and work-shy place". They are lowering the corporate tax rate and giving income tax breaks to the wealthy that live outside of France to try to combat this image. However, with the current presidential election going on and the possible election of Marine Le Pen might influence the decision.
Germany stands as a possible option as well since they are the dominant euro economy in Europe and have multiple large financial institutions already in Frankfurt. Luxembourg wants to be an option however, they are not changing any regulations to make it more attractive to business firms. The Netherlands speaks english and its an enjoyable place to be however, there are school and housing shortages. Additionally, Ireland is worried that they will not have an advantage or the know how in large scale business and have shortages of housing, schools and infrastructure. There are other options that firms could relocate to that are not in Europe as well. Financial institutions could relocate to places like New York, Hong Kong or even Singapore.
The article believes that Frankfurt could gain 10,000 jobs while Paris could gain 10,000 jobs in finance and up to 20,000 jobs in law and accounting. Slowly, many banks and businesses have already begun the process of moving institutions to other countries in the wake of Brexit. Where the financial institutions end up is up in the air but wherever they end up, the economic benefits to those countries will be great.
http://www.economist.com/news/finance-and-economics/21717032-other-cities-compete-not-london-each-other-european-financial-centres
Subscribe to:
Post Comments (Atom)
1 comment:
I recently read that the chief executive of Barclays has insisted that London will remain Europe's pre-eminent financial centre even after Britain leaves the EU. He claims even though the bank might have to make some "tactical shifts" depending on whether Britain remained in the single market following its departure from the EU, London would remain the principal financial market for Europe. It'll be interesting to see if this certainly turns out to be the case.
Post a Comment