1. Economics
January 23, 2017updated 19 Jul 2021 10:41am

Which of Europe's capitals has the most to gain from Brexit-fearing businesses fleeing London?

By Jack May

The latest instalment of our weekly series, in which we use the Centre for Cities’ data to crunch some of the numbers on Europe’s cities.

It has begun.

A few days ago, HSBC announced that it plans to pack up at least 1,000 jobs and ship them over to the Continent. The plan is Paris, enabling the international banking giant to continue a strong presence within the EU as the UK slithers out of the back door with a shrug and a small wave from the rest of the bloc.

With Theresa May’s ‘ye startin, m8?’ hardball speech indicating a harder – if not entirely hard – Brexit, severing us from the Single Market and the Customs Union, there can be no doubt in any sensible mind that many employers will be forced to pack up thousands of jobs and move them to cities that are staying in the EU.

Any assumption that all of these will be Londoners optimistically packing up and moving abroad should be put to rest; much of the pain will come from good old-fashioned redundancies, and we’ll soon know about it.

Of course, the chorus of ‘stop talking down Britain’ begins; if you are one of its sirens, or swayed by its song, I would suggest ceasing reading at this point. Remoaners, realists, and savoir-faire types only from now on, please.

So. If you’re a well-to-do, HR-minded, managing director type, at the helms of operations at some reasonably large firm with a strong presence in Britain, what are you to do at this point? You know that a vast swathe of your business relies on the easiest trade possible with other countries in the EU.

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And you’re a cosmopolitan type.

Brussels. You love it, you metropolitan elite, you. Image: Amanito via Wikimedia Commons.

You buy Fairtrade, read the Guardian (still!), occasionally pick up Le Monde because everyone loves a Berliner, and you sing Italian opera while you rustle up paella – even though you know it’s totally inappropriate and very naughty.

Work-wise, the company has a lot of needs. It’s a modern, 21st–century, global operation after all. So what are you after? Perhaps you’re into passporting, or maybe sending stuff across the Channel without 10-hour lorry queues is your thing. Either way – you’re looking at the situation post-Mayday, and thinking of various four letter words that your mother wouldn’t like.

You want a capital; your firm has a lobbying arm that would do well closely shadowing suggestible lawmakers over a glass of wine and a large déjeuner.  

The instinct is Paris, but what of the other options? What is worth bearing in mind?

Looking at the options by population size – livelier cities will keep your bullish employees happy at the weekend – there are clear winners.

London comes out in front, with Paris a little way behind, and Berlin leading the pack of Madrid, Rome, and Athens a way back. It does seem a little surprising that only six European capital cities would have populations over two million, but then the ways of measuring populations in cities are so infinite that it’s probably not worth dwelling on.

Next metric: high-skilled population. You know that you won’t be able to, and won’t want to bring all your current employees over with you on le Grand Départ. And if you are going to be recruiting locally, you’ll want people who know what they’re doing; high-skilled types who’ll fit in well, hopefully speak a barrel-load of languages, and know how to do all the clever things you don’t have a clue about because you breezed in from public school. Probably.

And this is where things get more interesting.

Vilnius comes out on top. Vilni-who? Vilnius, the capital city of Lithuania, clocks in 56 per cent of the population as high-skilled. Nearby Tallinn, in Estonia, comes next with 49 per cent. Perhaps most surprisingly, Bulgaria’s Sofia is third with 48.9 per cent, and it’s not until fourth place that Europe west of the Iron Curtain makes an appearance. Madrid offers 48.5 per cent, Amsterdam holds 47.9 per cent, and Paris dribbles in sixth with 46.2.

This makes things more complicated.

What about the unemployment rate? If the labour market’s too healthy, you don’t want to be bringing in a load of high-skilled jobs that you’ll struggle to recruit for, or that you’ll only be able to recruit high-pay-demanding twerps in for.

Unsurprisingly, Bern, Copenhagen, Amsterdam, and Stockholm huddle in a Germanic clump at the bottom of the heap. But Brussels has the highest unemployment rate of all the European capitals, at 18.4 per cent. Athens is second with 17.6, and Madrid clocks 15.8. Bizarrely – as judged by the norms of all right-thinking Anglophile prejudices, Warsaw has the second lowest rate of unemployment, at five per cent. Sofia has the sixth-lowest, with 8.5 per cent unemployed.

Spanner in the works.

As an economic measure, Gross Value Added (GVA) pretty much does what it says on the tin. It measures the value of what gets produced in an area, industry, or sector of an economy – whether in goods or in services.

By that measure, Paris makes a lot of sense as a choice, coming in second behind London – and not all that far behind, on £305billion to London’s £343billion. The other big European capitals follow – Madrid, Rome, and Berlin take third, fourth, and fifth, and bottom of the heap come our friends Vilnius and Tallinn.

But GVA on its own isn’t a perfect measure. GVA per worker divides, as you might guess, that GVA figure by the number of people in the workforce; linking the stuff made with the number of people making it, essentially working out how productive a place is.

London does less well here, coming in fifth with £68,900 per worker. The surprise lead is Dublin, at £86,100, pushing ahead of Paris at £80,400. Brussels and Amsterdam come in behind, and the bottom of the list is Sofia, in Bulgaria.

And what does all this mean?

Essentially, the chatter of post-Brexit commercial migration is all about Paris. Despite the odd bit of dribbling about Frankfurt am Main, in Germany, Paris is dominating all talk about where banks and businesses might move if they choose or need to leave the UK after Brexit cuts our links to crucial economic benefits.

That narrative will play into Paris’s hands very well – as well as, no doubt, suiting the agenda of Paris’s popular left-wing mayor Anne Hidalgo. But there are other options.

You definitely knew where Vilnius was before you read this. Image: Diliff via Wikimedia Commons.

Dublin is an incredibly productive city with the advantage of being English-speaking, for the most part, while cities in the Baltics, such as Vilnius and Tallinn, have the dual advantage of being populated by highly-skilled workforces and sending a message to the looming Russian bear that the European project takes the fortunes of all its members seriously. And if you wanted to do something about unemployment as well as giving Theresa May the middle finger, why not just pack up and move to Brussels?

But to take a hard realpolitik line about this, Donald Trump just became US president so there’s really not much point worrying. 

Jack May is a regular contributor to CityMetric and tweets as @JackO_May.

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