By Omolaoye Kunle (ACA) If you ever consult a friend…
With the U.K. leaving the EU trade bloc, most of the EU cities are eyeing London’s spot as the financial centre and the race is still on. Post Brexit, financial services institutions will be moving out of London and economy would suffer in this event. Hence, UK-based financial entities are now trying to “passport” their services within the European Union under the rules of the Single Market. Some of the analysts are trying to find out which are the cities that will replace London in the race to be the next financial centre.
The withdrawal process by UK government has already started on 29 March 2017 and plans to leave by April 2019, which means EU cities will be competing hard in all possible way but to take the position of London, which has been a major trade and business hub since ages will be a tough task.
Looking at the situation, a corporate accommodation service provider, thesqua.re has invested immense time for research in order to find the strong contenders who can be the future financial hubs of the EU. The study includes views from industry experts and the newly released Liveability scores from the Economist Intelligence Unit.
According to the research and analyses, here are the 4 key European cities that are going to be the next choice for financial centre after Brexit.
Dublin- Also a top-contender to stand the chance of being the next financial hub, Dublin, due to the city’s English-speaking faculties, a high ranking on the ease of doing business, holding strong academic reputation and competitive taxation scheme (at only 12.5%). The city’s Industrial Development Agency is probably the most enthusiastic about embracing and preparing themselves for the wave of large-scale investment, mostly from high finance. The most-affected industry post Brexit will be banking and Dublin currently is home to 2,500 Citibank employees and it is an estimated that Dublin could gain as many as 15,000 overseas staff in the next few years.
Frankfurt- Frankfurt has very high chances as it is best-placed and Germany is the largest economy in Europe. Frankfurt is Germany’s financial centre and also boast of world-class transport links to Europe and to the rest of the world. The city is also home to the renowned European Central Bank (ECB), the Bundesbank, and many financial firms like Commerzbank and Deutsche Bank. Moreover, Also, among 8 out of the 10 major banks of London have subsidiaries in the city Frankfurt, making it an eminent player to get benefited after Brexit.
Luxembourg- Luxembourg’s unique blend of its cooperative culture and its great ambition to become a pioneer in the financial industry. When we talk about Luxembourg’s connection with the Britain, they both have a great interplay especially in the financial industry. Now comes the question, with Brexit coming into effect, will Luxembourg get benefit when leading banks are trying to relocate in EU cities? A city that is home to already the number one investment fund domicile in Europe, Luxembourg doesn’t need to try hard to convince anyone of its suitability. Finance minister of Luxembourg Pierre Gramegna said- “the country is already a gateway into Europe and poised for a bigger role”.
Paris – Paris will be facing tough competition from Dublin, Frankfurt and Luxembourg, post Brexit to be the next financial hub. HSBC chief executive- Stuart Gulliver said –”Trading operations that generate about 20% of revenue for the lender’s investment bank in London may move to Paris, after Brexit”. UK based banks are already in talks to shift their offices in Paris but Gulliver said HSBC will “proceed quite slowly”. Not just banks, many other firms have started to consider Paris as potential city where they would like to shift post Brexit.
Brexit is now a testing time for financial service providers, who are presently situated in the UK but it would be interesting to know, which EU city would emerge as a winner and get benefited by the Brexit effect.
Here is the detailed report by thesqua.re complied in an e-book that includes views from industry experts and the newly released Liveability scores from the Economist Intelligence Unit. The research reveals that the 4 key European cities, which have the potential to be the next financial centre post Brexit are Dublin, Frankfurt, Luxembourg and Paris. But the most significant contenders in this race clearly emerge out to be Frankfurt and Luxembourg. It would be interesting to see how things roll out post Brexit and what effects will it have for UK based financial service providers. Article 50 being put into motion, leading Banks have been announcing plans to relocate their services and headquarters away from London and into other EU locations.
Visit https://www.thesqua.re/london/e-book to download your free copy of E-Book!