France tries to win post-Brexit jobs from London

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A government push to make France more "finance-friendly" is raising Paris' chances of attracting Brexit-fleeing banks from London although it is raising its game at a late stage in the process, a group of senior financial industry executives said.

Eager to keep Frankfurt from getting the bulk of jobs that leave London, Prime Minister Edouard Philippe outlined on Friday plans to ease the financial sector's wage bills and vowed to keep the regulatory burden competitive.

Executives at a business conference in southern France this weekend said the election in May of former investment banker Emmanuel Macron had brought a night-and-day change in attitude towards their industry.

French Prime Minister Edouard Philippe at the National Assembly in Paris, France, July 4, 2017. /Reuters Photo

"The government clearly wants to make France finance-friendly," UBS France head Jean Frederic de Leusse said, noting the contrast with Macron's predecessor Francois Hollande, who famously once declared the finance industry to be his enemy.

Philippe announced the scrapping of the highest bracket of payroll tax for firms like banks that do not pay VAT, and canceled a planned extension of tax on share trading, both measures unthinkable under Hollande.

The new policy will also ensure bankers' bonuses are no longer taken into account when labor courts decide unfair dismissal compensation.

A picture illustration of US dollar, Swiss franc, British pound and Euro bank notes, January 26, 2011. /Reuters Photo

Deutsche Asset Management head, Nicolas Moreau, said that while Philippe's package of measures was a step in the right direction, Paris had a lot of catching up to do in the race with other cities trying to win jobs from London.

"Today Frankfurt has a big lead, a lot of decisions have already been taken," said Moreau.

Even though UBS historically has stronger ties to Frankfurt, Leusse said that nothing could be ruled out at this point about where it would decide to put staff.

City workers cross the River Thames with the City of London financial district seen behind them, in Britain October 27, 2016. /Reuters Photo

"Right now I don't know what to tell UBS bosses about what is going to change in France, whether things are really going to change," Leusse told Reuters in an interview.

Dispelling the image of France as a country of high taxes and strict labor laws will be no easy task, however.

"The main blocking point is psychological. That means that our partners will have to be convinced that France is serious about developing its economy and attracting financial services," Generali France head Eric Lombard told Reuters.

(Sources: Reuters)