European cities compete for London's commercial position after the “Brexit”
14 July 2016, 05:10
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Britons had only just begun to digest the results of their referendum when cities and companies across Europe leapt into action, all of them jockeying to lure businesses, entrepreneurs and investment from London, the region's economic behemoth.
Much remains up in the air, as the country embarks on a yearslong process to leave the 28-nation bloc. Britain has not even officially filed to leave, and there will be painful negotiations on matters including trade and whether people from European Union nations will have the freedom to work in Britain, as they do now.
Despite the high levels of uncertainty, others in Europe are, in effect, looking to gain from Britain's pain.
Across the Continent, officials are already vocally trying to entice financial services firms, technology startups and others to forgo the British capital for cities like Paris, Luxembourg, Frankfurt and even the relatively tiny Lithuanian capital, Vilnius. They warn that businesses will suffer if they stay in a Britain that no longer has unfettered access to the EU and its hundreds of millions of potential customers.
"We didn't want the vote to turn out that way," said Tarek Al-Wazir, economics minister for the German state of Hesse, which includes Frankfurt. But, he added, "we prepared just in case."
Several companies — including banks like HSBC and JPMorgan Chase and the telecommunications giant Vodafone — have said they will consider moving at least a few jobs to the Continent.
"A 2 percent loss for London is a 20 percent gain for Frankfurt," said Hubertus Vaeth, managing director of Frankfurt Main Finance, a coalition of businesses and local government organizations that were behind the campaign.
When it comes to the financial services industry, several cities have rolled out the red carpet to lure London-based companies.
Before the referendum, local and regional government officials held an event in Paris at the offices of Euronext, the stock market operator. Called "Welcome to Europe!" it encouraged financial services companies to consider the French capital as an alternative.
Valérie Pécresse, the president of the region that surrounds Paris, has extolled the city's virtues, noting the opening of new bilingual schools as well as its quality of life and available office space.
"When Britain goes out, a lot of firms will have to relocate in Europe," Pécresse said. "There is a competition that is going to take place. It is already taking place between the big metropolises in Europe."
Along with those large cities, smaller financial centers — in Belgium, Luxembourg and the Netherlands — are also getting involved. Even Lithuania, a country not typically noted as a hub for business in Europe, much less high finance, is involved.
On the day the referendum results were announced, Antanas Guoga, a Lithuanian member of the European Parliament, wrote to several financial institutions with large London staffs, suggesting they move some of their European operations to Vilnius, Lithuania's capital, with a population of just over 500,000.
Guoga, a former professional poker player and chief investment officer for Vilnius, noted in his letter that the British bank Barclays, the Danish lender Danske Bank and the stock market operator Nasdaq all had operations in the city.
"It's an opportunity now to let everyone know about our success stories," he said.
Despite the overtures from elsewhere, officials in London still believe they will retain most of the business and finance that is currently based there.
"There will be no mass exit of banks and financial institutions from the Square Mile," Mark Boleat, policy chairman of the City of London Corp., said in a statement, referring to the British capital's financial center.
"The City of London has thrived as a financial and trading center for more than 1,000 years," he said, "and will continue to do so."
The competition, though, extends outside of financial services — Europe's tech hubs are turning on the charm offensive, as well.
While cities are fiercely competing to steal companies from London, others are hoping to profit by helping companies sort through their options.
Major law firms in the British capital are gearing up for a surge in business: A spokesman for Allen And Overy said that before the results of the referendum, 500 clients registered to take part in a conference call discussing the fallout from the so-called Brexit. After the results, 1,200 more signed up.
Real estate agents in major cities across the Continent, including Stockholm and Frankfurt, are also reporting increased interest from banks and technology companies casting their eyes away from London.
All of this has been a long time coming. The referendum was officially announced in February, but has been in the cards for more than a year, and those hoping to profit from a Brexit have been planning extensively.
