France will use "all means" to make Paris Europe's main post-Brexit financial capital, Prime Minister Edouard Philippe said on Tuesday, while international bankers said they wanted to see if such pro-business reforms would stick over time. Eager to attract banking jobs leaving London, Philippe has pledged to reduce the cost of employing financial services staff in France and also committed to keeping the regulatory burden on finance companies competitive.
"The message I want to share with you is clear and it is simple: the French government is committed to boost Paris' attractiveness by all means," Philippe told a banking conference in Paris, presenting the package of reforms which includes a cut to payroll tax on high-earning bankers. "We want Paris to become Europe's new number one financial hub after Brexit," Philippe said, speaking in English to an audience of financial executives.
Since the election in May of former investment banker Emmanuel Macron as president, the French government is pushing hard to catch up with Frankfurt to attract finance jobs moving from London to retain EU single market access after Brexit. Paris, Frankfurt and other big European cities are all trying to woo banks based in the City of London financial centre and some have already made plans to move.
In addition to the new measures aimed at the finance industry, the government also has plans to reduce the scope of France's wealth tax to just real estate, while also setting a tax on all capital income at a flat rate of 30 percent. In other business-friendly measures, the government has committed to cutting France's corporate tax rate to 25 percent from 33 percent over time and aims to overhaul its labour code in the coming months.
Bank executives welcomed such measures, but France has its work cut out to convince businesses that these changes are for the long term after decades of high taxes and strict labour laws. "It's important to have consistency, the rule of law, stability, steadfast ... it's not just important for banks, but for all economies," J.P Morgan Chase & Co Chief Executive Jamie Dimon told the conference.
"I think this government has made an enormous leeway, we are here to listen to them," Dimon said. Among the big international banks, only HSBC has so far said it would shift a large number of jobs to Paris with plans to move 1,000 posts if Britain opts for a hard Brexit. Among French banks, Societe Generale told Reuters it could move up to 400 investment banking jobs to Paris out of the 2,000 it currently has in London.
HSBC's Chief Executive Stuart Gulliver, also speaking at the conference, welcomed Philippe's latest measures as a positive step "if enacted", but also wondered whether they would stay at least through two five-year presidential cycles. "It's very early within the presidency and people still have the impression in their minds of president Hollande declaring finance is the enemy, there were demonstrations, there was a very high tax rate," Gulliver said.
"Are we now on the verge of 10 years, because large companies like ours need to plan for a long period time," Gulliver said, questioning in particular whether the labour law reform would stick. Dimon said that J.P Morgan would probably use its existing bank in Frankfurt to domicile its European operations in the EU, but that jobs could be spread among Paris, the Netherlands and other cities.
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