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3rd Mar 2024

EU capitals woo British business after Brexit

  • France wants a piece of UK business. (Photo: Joe Price/Flickr)

British prime minister David Cameron once promised to "roll out the red carpet" for French professionals who didn't want to pay high income taxes. The year was 2012 and Francois Hollande had just been elected in France on a promise to tax top earners 75 percent of their wealth.

Following Britain’s vote to leave the EU, France was quick to announce that the red carpet can go both ways.

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“We want to build the financial capital of the future,” prime minister Manuel Valls said on Wednesday during an annual conference of France’s financial industry lobby, Europlace. “Now is the time to come to France", he said.

Dublin and Luxembourg also voiced bids this week to snatch business from the City of London, which is home to a fifth of global banking operations, amid the uncertainty caused by Britain’s vote to quit the EU.

Luxembourg's economy and finance ministers, Etienne Schneider and Pierre Gramegna, said they will tour the UK by the end of the month to promote the Grand Duchy as an alternative location.

Ireland revealed plans for an advertising campaign targeting fund managers. Its state agency for foreign investment, IDA Ireland, said it had already contacted 1,200 British companies since the Brexit vote on 24 June.

Dublin has highlighted its similarities with the UK, including the use of the English language, as its selling points.

Luxembourg spoke of its political stability due to its strong pro-European sentiment.

France's Valls recalled plans to cut corporate taxes from 33 to 28 percent. He announced a new service to help companies relocate. He said it was possible to tweak the system so as to provide tax reductions to foreigners for their first eight years in residence instead of the current five, and committed to open international schools where children would be taught in their mother tongue.

Bank of France governor Francois Villeroy de Galhau also vowed to quickly examine applications from British financial institutions that wanted to relocate to Paris.

But for his part, Germany’s powerful finance minister Wolfgang Schaeuble warned of a "race to the bottom" on competitive tax cuts.

The German statement came after the UK's chancellor of the exchequer, George Osborne, pledged on Monday to cut corporate tax to less than 15 percent to encourage firms to stay in the UK.

Meanwhile, the Brexit fallout saw the pound plummet to new lows against the US dollar on Wednesday.

Seven UK property funds also froze withdrawals to stop investors from pulling out of the British market and the number of job ads in Britain has fallen by nearly 700,000 since it voted to leave the EU on 23 June.

Some linked the latter development to growing hostility towards foreigners, others said it was an early sign of companies pulling out.

Britain may run into problems of finding skilled workers if EU citizens leave in large numbers, one consultancy warned.

But Amazon, the online shopping platform, said it will create 1,000 new jobs in the UK, on top of the 2,500 announced earlier this year. The firm said that Brexit had not changed its plans.

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