There is one big thing standing in the way of France luring banking jobs from London after Brexit: the prospect of “Frexit.”
With National Front leader Marine Le Pen among the top presidential candidates, her platform of taking France out of the euro and the EU is repelling finance executives.
If she loses, a more business-friendly leader such as former French prime minister Francois Fillon or minister of the economy, finances and industry Emmanuel Macron could implement reforms that would make Paris more competitive.
“It’s really black or white: With a Le Pen election no foreign firm would consider to move business to Paris,” said Markus Ohlig, a managing director at Greenwich Associates who advises asset managers and banks in Europe and Asia.
Fillon and Macron “both have agendas that should create new confidence” for business decisions in favor of Paris, Ohlig said.
Le Pen wants to leave the euro, revoke central bank independence and print a new currency to finance welfare and industrial projects. Polls show the 48-year-old leading in the first round of balloting next month, but losing the May runoff against either Macron or Fillon.
Still, the campaign of the conservative Fillon, has been rocked by a worsening scandal over the employment of his wife and children as parliamentary aides.
While the 39-year-old Macron, running as an independent, has climbed in opinion polls, he has never held elective office and the durability of his support is untested.
As Paris vies with Frankfurt, Dublin and other cities for the potential spoils of Britain’s exit, the presidential race is shaping up as a make-or-break event.
Pledges by Fillon, 62, to lower taxes, smooth hiring and firing rules and scrap the 35-hour work-week got discreet praise early on from French corporate leaders.
Executives are increasingly looking favorably on Macron’s less aggressive reform plans, which he outlined in a presentation on Thursday.
Paris currently has about 150,000 finance industry employees, including back-office staff, and could lure 20,000 workers or more from Britain after Brexit, estimated Paris Europlace, the city’s financial lobby group.
Four globally systemic banks as well as insurance giant Axa SA have their headquarters in the Paris region.
The city is also one of Europe’s biggest asset-management and bond-trading centers.
“The Paris hub is hoping to become more competitive after the elections,” Europlace head Arnaud de Bresson said.
Officials from the group are in contact with all of the campaign teams and “everyone is listening to and is aware of” our priorities, De Bresson said.
BNP Paribas SA and Societe Generale SA have suggested they may repatriate a marginal number of jobs to France following Brexit.
London-based HSBC Holdings PLC is the only big foreign bank that has indicated it will relocate employees to Paris. It already owns one of the country’s top consumer-banking networks.
HSBC’s choice might remain an isolated case unless France’s next president reduces the nation’s disadvantages in terms of tax levels and labor costs.
“It’s maybe an exaggeration to say, but probably close to reality: eliminating a job takes three days in London, three months in Switzerland, three years in Paris,” Jean-Frederic de Leusse, head of UBS Group AG’s French unit, told senators in Paris last month.
“Clearly the new French government’s policy will be looked at and will matter in the choice,” but so far there isn’t “enough visibility” to decide on Brexit-related moves, he said.
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