Five years ago, British politicians gloried in France’s political dysfunction.
France’s then-Socialist government had, after all, repeatedly proved itself an anti-business basket case. President François Hollande’s proposal for a 75 percent marginal income-tax rate drove wealthy celebrities to renounce their French citizenship. He called “the world of finance” his “enemy.” Other French ministers attacked industry titans.
The gleeful response from the mayor of London: “Venez à Londres, mes amis” (Come to London, my friends).
And in a Group of 20 speech that really galled the Gauls, then-British Prime Minister David Cameron said that he would “roll out the red carpet” for anyone fleeing anti-business policies in France.
Eh bien, tut the French today. How the tables have turned.
Exactly a year after the shattering Brexit vote, uncertainty and political incompetence roil the United Kingdom. Brits don’t know whether their split from the European Union will be “hard,” “soft” or “scrambled,” or even what their leaders are asking for in the divorce.
Many British industries, from academia to automobiles, fear losing access to top talent and the European market. Arguably no sector has more at stake, though, than Hollande’s former “enemy” — that lucrative financial industry.
Depending on how Brexit talks shake out, British and global financial institutions may no longer be able to use their London bases to sell services throughout Europe. Also at risk is London’s enormous euro-clearing business, which processes transactions worth about $1 trillion per day.
And French officials are licking their lips. Or, to use their own preferred, Cameron-inspired metaphor: They are rolling out the “blue-white-red carpet.”
“I was against Brexit and I’m still very much in favor of the U.K. staying in Europe,” Valérie Pécresse, the president of the Paris region, told me. “But that’s a sovereign decision of the British people, and I respect it.” No point, she says, in wasting a precious opportunity to repatriate some of the “thousands of jobs” that left Paris for London in recent years.
She and other French officials have moved swiftly to try to peel off British jobs, which their counterparts in Frankfurt, Dublin and other cities are also eyeing.
Almost immediately after the Brexit vote, France launched an aggressive ad campaign (“Tired of the fog? Try the frogs!”). Financial regulators began allowing firms to submit their legal paperwork in — sacré bleu! — English. Hollande’s government even expanded a generous suite of tax breaks for foreigners who decamp for France, as well as French expats who decide to return home.
At pitch meetings in London and New York, officials and lobbyists tout French international schools, job opportunities for spouses, proximity to big clients and, of course, the cultural allure of the City of Light.
“When was the last time you booked a weekend in Frankfurt?” teased Ross McInnes, chairman of French aerospace and defense firm Safran and a government-appointed “economic ambassador” in the British courtship effort.
But the “game-changer,” as Arnaud de Bresson, chief executive of financial lobbying group Paris Europlace, put it, was the recent election victories of Emmanuel Macron and his brand-new centrist party.
The charismatic new French president is in some ways the reputational opposite of the predecessor he served under as economy minister. He’s also a convenient foil for more insular, backward-looking leadership in Britain (and the United States).
He’s a former banker, for one, a fact not lost on British financiers otherwise wary of France’s reputation for hostility toward bankers.
More critically, Macron has vowed to make the country more business-friendly, entrepreneurial and economically flexible. This means fixing France’s notoriously rigid labor laws — no easy task — and further reducing French tax rates (including exempting financial assets from the national wealth tax).
Nearly every French official, lobbyist and business leader I’ve interviewed has said that France desperately needs these reforms to happen if France is to win the post-Brexit beauty contest. And in the same breath they insist that France’s anti-business reputation is unfair.
The 75 percent “supertax” on the wealthy is gone, everyone is quick to remind me. (The policy quietly died at the end of 2014.) And France’s famed 35-hour workweek isn’t always observed by finance employees and executives.
“The reputation we have, it was probably fully justified a few years ago, but not to the same point today,” said Christian Noyer, the former Bank of France governor who has been commissioned by the French government to woo London financiers.
So far just one major financial institution, HSBC, has publicly committed to sending jobs to Paris. But the charm offensive isn’t over.
More important, neither is the competence offensive. Downing Street may want to take note.