Brexit Alert: Is London Losing to Frankfurt as the new Financial Capital?
In 28 Days Later the protagonist wakes up after an epidemic outbreak that has turned everyone into zombies, only to find a deserted London.
In real life, 3 months after the UK referendum panic, the bankers are considering an escape from the capital if their firms lose access to the EU.
London is the world’s financial capital, but the decision to leave the European Union has given Frankfurt the opportunity to claim that position. The German capital is luring London bankers who are thinking of relocating in an EU capital. But, while Frankfurt seems to be in the lead, there are also other European cities that are leering at London’s financial throne. The Prime Minister of France, Manuel Valls, thinks that Paris can also be the “financial capital of the future.”
The investment agency FrankfurtRheinMain GmbH is already setting up an office in London advertising Frankfurt as the city of the European Central Bank and the “financial centre of the Eurozone.” On Wednesday (21/9/2016), at a reception for German and British businesspeople held at London’s Serpentine Sackler Gallery, the business community discussed the financial alternatives to post-Brexit London. The president of FrankfurtRheinMain GmbH, Eric Menges, reassured the Mayor and Londoners that “We’re not here to poach business” but he made sure to explain that those bankers who did move to Frankfurt “aren’t dying of boredom or sausage and cabbage overdoses.”
The Mayor of London, apologetically said that “I’m sure Frankfurt will become London’s economic gateway to the European Union” (One can only hope).
Michael Mellinghoff, the managing director of financial technology firm TechFluence, added that “The phones are ringing in Berlin and Frankfurt, they’re ringing in Dublin, they’re ringing in Luxembourg. People are exploring their options already, of course. If you ask me, Britain has shot itself in the foot – from a logical angle there are not many pros. Most people are very disappointed about the decision because it brings the UK further away from Germany and the EU. But if it is happening, it is a chance for cities like Frankfurt to take advantage.”
While London is a global trading centre, Frankfurt is taking advantage of businesses wanting to move within the EU and is competing with other European cities like Dublin and Paris. From its tasty wurst and respected universities to its low rents and good transportation, the international city is flaunting its services to attract firms which are investigating alternatives while waiting to find out what Brexit might mean for their business. Frankfurt is also the EU’s insurance regulator and home to around 200 foreign banks. A cosmopolitan centre, Frankfurt has more than 180 nationalities and a 600 year old banking tradition.
Boston Consulting Group (BCG)
360 leading bankers agreed that probably other global financial centres will absorb 20% of London’s financial services jobs. In a survey by the Boston Consulting Group (BCG) about possible financial centres to replace post-Brexit London, the 360 bankers from the UK, USA and Germany evaluated nine possible places and found the Financial Centre Frankfurt am Main as the top choice because of Germany’s economic and political stability.
In the case of Brexit, FrankfurtRheinMain GmbH has set up a website with information about housing, taxes, education and lifestyle for those business executives interested in moving their companies there. Menges said that “I show them what a high standard of living they can enjoy here, that you can live, like I do, 15 minutes’ drive from the city centre, close to vineyards and keep chickens in the backyard, or else in the city centre, but for a half or third of the price you might pay in London Tourist Deals. And you can cycle everywhere. We have a world-class opera house, theatres, art galleries and restaurants, and everyone speaks English.”
On the website, there is also a promotional video advertising the region’s beauty, financial strength and ideal location targeting again London banks.
But not all is rosy in Frankfurt: there are high German taxes, strict labour laws and the city itself doesn’t have the edgy cool attitude that London carries out so well.
In the end, Frankfurt is a strong possibility for those companies that want to exit Brexit, but it all depends on what kind of Brexit the UK chooses. After all, Menges said, “One would assume that the harder the exit, the bigger the opportunity.”