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Economy / Jobs

“The vultures are circling”: post-Brexit, other cities are plotting to displace London as Europe's business capital

On Thursday 23 June, the United Kingdom voted to leave the European Union. On Friday 24 June, this happened:

For those who aren’t aware, the Île-de-France (literally: “island of France”) is the French government region that contains the capital. In other words, within mere hours of the result coming in, one layer of the Parisian government was spending money on promoted tweets, intended to persuade risk-averse, free-market loving businesses to move from London to Paris.

This seems very unfair, since Londoners overwhelmingly voted to remain in the European Union, but I guess that’s show business.

This wasn’t the only reaction from the French capital, of course. On Monday 27 June, London’s mayor Sadiq Khan and his Parisian counterpart Anne Hidalgo co-wrote a letter, making an argument which suggests they’ve been reading Benjamin Barber:

If the 19th century was defined by empires and the 20th century by nation-states, the 21st century belongs to cities. As the mayors of London and Paris, we are today committing to work ever more closely together in order to build far stronger alliances between cities across Europe and around the world.

The letter was published in the Financial Times, and it expresses a lovely commitment to co-operation, undermined only slightly by the fact that at the time Île-de-France was advertising on the FT’s homepage:

(Paris and Île-de-France are different, though over-lapping, entities, of course, but still.)

For the past couple of decades, London has been Europe’s undisputed business capital: the New York City to Brussels’ Washington DC. There are a lot of reasons for this: the English language, the breadth and depth of its financial industries, a pro-rich tax regime.

But one of the big factors behind London’s success is its openness: to other cultures, to the single market, and to the workforce that it brings. Although these things could survive the Brexit vote, there’s likely to be a question mark hanging over them for some time, and businesses don’t like uncertainty. Hence, the spate of opportunistic advertising.

Paris is not the only city currently plotting to steal London’s crown. A mobile advertising hoarding, apparently funded by the German liberal party, was spotted not far London’s tech district this morning, encouraging start-ups to move to Berlin:

The Dutch government, meanwhile, has set up a “Brexit information Point” in Amsterdam, for local British expats who may be worried about their future:

British citizens already residing in the Netherlands, individuals interested in relocating and businesses are encouraged to visit or inquire about policy changes.

“The Expatcenter will [gather] all relevant information together, keeping it up to date and available at all times. The counter will provide relevant and applicable information to Britons who already live or wish to move here, ” wrote Councillor Kajsa Ollongren in a letter, adding that she expects that more companies will want to settle in Amsterdam due to the Brexit.

(From Expatica. Emphasis ours.)

In Dublin, meanwhile, the local Chamber of Commerce is calling for business tax cuts that might attract any Brexit-fearing businesses. From the Irish Times:

Dublin Chamber’s Director of Public Affairs Aebhric McGibney said the news that the UK is considering lowering corporation tax – one of the few tax rates which is currently lower here – should serve as a wake-up call to the Irish Government.

“We must now concentrate on rolling out the green carpet for business, which will allow us to maximise the opportunities thrown up by a British exit from the EU,” said Mr McGibney.

And the real estate industries in Barcelona and Madrid are saying, effectively, me too. This page is in Spanish, but it basically says – wouldn’t you rather base your multinational business somewhere sunny, and possibly near a beach?

Last but not, I fear least, yesterday, this happened:

Investors in Standard Life’s property funds have been told that they cannot withdraw their money, after the firm acted to stop a rush of withdrawals following the UK’s decision to leave the EU.

The firm halted trading on its Standard Life Investments UK Real Estate Fund and associated funds at midday on Monday, citing “exceptional market circumstances” for the decision. It said the suspension would remain in place until it is “practicable” to lift it, and that it would review the decision at least every 28 days.

The £2.9bn fund, which invests in commercial properties including shopping centres, warehouses and offices, is thought to be the first UK property fund to suspend trading since the 2007-2009 financial crisis.

(From the Guardian.)

At the moment, we’re still in the phoney war stage of Brexit. Article 50, which will begin the formal process of negotiating Britain’s departure from the union, has yet to be activated. In effect, we don’t even have a prime minister right now. Brexit, whatever form it finally takes, is still literally years away.

What is clear, though, is that the effects of the referendum result are already well underway – and London’s economy may suffer for it.

Jonn Elledge is the editor of CityMetric. He is on Twitter, far too much, as @jonnelledge.

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