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Abu Dhabi, UAESaturday 22 September 2018

London-Paris rivalry becomes a battle for financial hearts and minds

British withdrawal from EU offers chance for French capital to stake claims

Paris claimed the title of the world's most elegant city. Courtesy Charles Platiau / Reuters
Paris claimed the title of the world's most elegant city. Courtesy Charles Platiau / Reuters

Rivalry between London and Paris dates from long before the Brexit vote threatened to transform the competing economic attractions of the two capitals.

The cities are in almost perpetual dispute over which is the most visited in the world, citing different statistics or differing interpretations of the same figures.

In 2012, David Cameron, then the British prime minister, famously – or notoriously – seized on “bash the rich” tax proposals under his French counterpart François Hollande’s socialist government and promised to “roll out the red carpet” in welcome to French businesses.

In tit-for-tat fashion, another socialist, Anne Hidalgo, said before becoming the mayor of Paris less than two years later that London was really just an inferior suburb of her city, with more crime, fewer entrepreneurial business start-ups and fewer foreign visitors.

She did admit that London had less dog mess on its pavements and that its inhabitants were kinder.

This did not stop her London opposite number, Boris Johnson, tweeting haughtily that one of the few areas where Londoners lagged behind Parisians was that “they turn their sewage into electricity”.

Mr Johnson is no longer the mayor, he is Britain’s foreign secretary, a passionate advocate of the withdrawal from the European Union he once opposed. And the tale of two cities has become a battle of the fittest as each vies for post-Brexit supremacy.

In early skirmishes, Paris has shown itself to be a determined adversary. Ever since the UK referendum of June 23, 2016, storm clouds have loomed for London, threatening it status as Europe’s leading financial centre.

HSBC has confirmed it is moving 1,000 people working for its investment banking operations from London to Paris because this is the part of the group’s operations most likely to be affected by Brexit. JP Morgan plans to transfer as many to Frankfurt, Dublin and Luxembourg.

And conscious of the stiff competition it faces – especially from Frankfurt – in luring Brexit’s financial refugees, the French capital’s strategy includes emphasis on culinary and cultural qualities it says cannot be found in other European countries.

But leaving aside the German city’s appeal to banking executives, the truth of the tussle between Paris and London is that both hold enormous natural and man-made allure – and both suffer from familiar drawbacks.

London is more vibrant, Paris aesthetically more spectacular. French people moving to London love the less stuffy workplace ambience and a more dynamic theatreland; the British in Paris relish café society, the illuminated splendour of the river Seine by night and the vast open spaces around landmark buildings.

In other respects, the playing field is level; both capitals suffer the trials of modern city life from the obscenity of terrorism to ubiquitous, aggressive begging and overcrowded public transport.

As for winners and losers post-Brexit, the weakened state of the British government following the prime minister Theresa May’s failed gamble on a snap June election creates huge uncertainty.

Even though HSBC’s chief executive Stuart Gulliver sees a resilient London remaining a global financial centre, the “revenue impact of Brexit made good in two to three years”, he envisages derivatives operations needing to move out to ensure continued access to the European single market.

For Olivier Campenon, who took over as the president of the Franco-British Chamber of Commerce and Industry in Paris on the day of the referendum last year, the outlook is gloomy but could be worse.

“My view is that Brexit can only be bad, very bad or very, very bad,” he says. “I am an optimistic guy so am expecting it will just be bad.”

The chamber represents about 300 members, about half British and French-owned, from small-scale businesses to companies quoted on France’s stock exchange, the CAC 40.

Mr Campenon says most are adopting a cautious approach, acknowledging Brexit will bring challenges but impatient to know the detail still to be thrashed out.

“The real impact is yet to come,” he says. “It hasn’t started and the only immediate effect has been the fall in the value of the pound.”

But as far as French members are concerned, the choice is hardly encouraging for Mrs May: “Wait and see, or a reason to pause development in the UK.”

Mr Campenon is not afraid to mention the impression of “arrogance” that he feels Mrs May – also, nominally at least, pro-Remain before the referendum – gave in her first approaches to managing withdrawal from the union.

He hopes her future dealings with the EU will be tempered by the recognition that she does not have the strength of public backing she imagined.

The chamber’s members, meanwhile, feel in limbo. They fret about the time withdrawal negotiations will take and about whether they can afford to wait for their completion before making important investment decisions. Some, Mr Campenon says, are worried enough to be reconsidering future investment plans, and even their presence in London or Paris. Others are content to act as if nothing has fundamentally changed.

After the Brexit vote that he says took him completely by surprise, Sébastien Fontanges, who heads a removal company running weekly trips between London and Paris, told The National of his concerns for the future. His state of mind a year later sums up the way a good many businesses are feeling.

Back in the summer of 2016, Mr Fontanges, whose company Delahaye Moving, is based in the Parisian suburb of Carrières-sur-Seine, said: "I am not sure at all what will happen. Europe needs the stronger countries and is losing one. It cannot be a good thing".

Today, he feels unable to say to what extent, if any, his concerns have evolved. “We do business in and out of the UK as usual … no particular change to report since last year."

Plenty of people doing business between Paris and London, or having moved for work from one to the other, will share his hope that whatever technical changes and new hurdles Brexit eventually brings, it will be a case of plus ça change, plus c'est la même chose – the more things change, the more they stay the same.

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