COMMENTS: As Brexit sputters, stops and restarts, the potential heirs are vying for the largest share of the estate. Frankfurt was the first to dash into the arena to attract the financial and investment institutions, followed by Dublin and Luxembourg. Now, Paris has joined the fray and seems to have removed all the stops so as to appear the most beautiful.
France has just announced changes in its laws, taxes and regulations; all advantageous to the investment crowd. 30% lower taxes on Carried interest, a serious drive to harmonize EU corporate taxation, amortization of goodwill, lowering corporate tax to 25%, removal of the top tax bracket on salaries, etc.
The UK must be wringing its hands as the sharks circle. Some economists are forecasting dire Brexit numbers, such as a potential loss of as much as 87,000 jobs, which could grow, in the event of exiting the customs union, to 176,000 jobs and as much as US$ 27 Billion in investment losses.
France’s determination was clearly stated by the French Prime Minister: “A financial center is built with patience, by being consistent”.
This strategy seems to be paying off, as such big names as HSBC, Bank of America, JP Morgan, Citi Group, Morgan Stanley, Goldman Sachs, Standard Chartered, Wells Fargo have indicated publicly that they are for Paris.
NEGATIVE FOR: The UK who will lose its prestigious financial center that was a source of substantial income and wealth. It also, splinters the huge and powerful financial center into smaller parts spread among various countries, which means that the parts may not be as strong and influential as the whole when in the UK.
POSITIVE FOR: For the other financial centers, whether established or budding; New York, Singapore, Tokyo, Hong Kong and of course China.
IMPACT POTENTIAL: Medium
TIME SCOPE: Medium and Long Term