Emmanuel Macron: Boris Johnson refuses to shake hands
In the 1980s Margaret Thatcher helped cement London’s position as the financial services center in Europe. Their position has been strengthened by major reforms and deregulations backed by an experienced English-speaking workforce, a common law framework and a flexible work environment. Now Mr Macron is serious about restoring France’s financial competitiveness and the crackdown on the UK could help him in this quest.
Wolf Klinz, a former German MEP, told The Independent in 2017 how the French head of state could achieve this.
He argued that the harder Mr Macron pushed the UK on issues such as the financial passport or euro clearing rights, the more business Paris could try to lure away from London.
In addition, the French president has the “credibility and personality to convince the players of the city of the advantages of Paris”.
However, as the leader of a country far more to the left than Britain, Mr Macron had to prove he was ready to undertake serious reforms to attract major financial players.
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He was elected in order to reform the French economy and administration, and one of his first acts was to pass a law reforming the labor market.
His decrees made it easier for companies to hire and fire workers, simplified negotiations between employers and workers, and reduced the power of the extremely influential French unions.
Mr Klinz said before the vote: “If it succeeds, this should pave the way for making Paris an attractive location for financial services for the internal market.
“To some extent this will depend on the outcome of the Brexit negotiations, and a hard Brexit, in which Britain loses access to the single market and exits the customs union, would further strengthen France as a financial center.”
The City of London is currently the undeniable financial capital of Europe
Mr Macron hoped his reforms would tackle France’s persistently high unemployment statistics as well, and by October 2019 there was some evidence that his reforms were achieving their goals – unemployment had dropped to its lowest level in 10 years.
In addition, the French economy appeared to be more resilient to the global economic slowdown than countries like Germany, and there has been a decline in fixed-term contracts, according to the FT.
Florian Hense, an economist at Berenberg, an investment bank, said: “The chances are good that France will look much better by 2022 thanks to Macron’s labor policy.”
In this way, Mr Macron has made France a more credible alternative to the UK for financial services.
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Paris also has a head start on other European cities as it is already home to several of the EU’s top banks, the pan-European Euronext exchange and the European Securities and Markets Authority (ESMA).
It has the second largest wealth management industry in the world and the largest European bond market.
However, to really turn the tables, he has to make sure that it is more difficult for companies to maintain the status quo to center themselves in London.
Perhaps this could explain why Mr Macron was one of the most difficult EU leaders to negotiate.
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To promote Paris as the center of the European financial sector, Mr Macron had to ensure that the city lost its access to the internal market after Brexit.
He has always insisted that the “four freedoms” cannot be disentangled, which inevitably pushes Britain towards a hard Brexit.
In the meantime, Paris can do business with European bodies to improve its own ranking.
Mr Klinz suggested, “Paris could work with Germany to broker a deal that would move the European Banking Authority to Frankfurt, near the ECB, and handle and handle euro-denominated transactions to Paris.
Boris Johnson met Emmanuel Macron in London last week
“In addition, Paris could try, in close cooperation with the European Commission and the European Parliament, to strengthen the role of ESMA.”
In this way, Mr Macron could well try to boost Paris in the financial sector and to replace London in a post-Brexit world where the city can no longer take advantage of the single market.
Even so, there are strong signs that London is growing strong and will remain a hub for the foreseeable future, which means the French president may have to cut his work out for him.