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By Mariarosaria Marchsano
2 February 2017
Summary from Italian:
- It is noted that the first objective of Milan Mayor Giuseppe Sala is to attract the European Medicines Agency to his city, possibly in the area where the Expo was held in 2015. However, the city is also looking to attract financial groups and intermediaries to become the new “City of Europe”.
- The Mayor is working to bring together political, economic, social and academic forces to make these ambitions a reality.
- This is being played out on the axis between Milan and Rome, with the government solidifying its support, with the exception of the Five-Star Movement, through the Finance Committee’s recent passage of a resolution which urges the Gentiloni Government to work to establish the Milan Financial District which would be able to carry out the full range of investment services under the MIFID Directive.
- While competing with cities like Paris, Frankfurt and Brussels for such institutions, it is relying on its pre-existing ties with the LSE to make its case.
- On 26 January, the Milan City Council approved a resolution to support the EMA transfer in the Expo area, alongside new science park, the Human Technopole. Providing a suitable headquarters a still a real issue, and the Council is also considering as an alternative the financing for a new structure from scratch. A real estate developer must be found, and the necessary financial resources must be set aside.
- The Lombardy region is the first in the country for pharmaceuticals and biotech, with half the national total employees, production, research and clinical trials – 28,000 are directly employed while 18,000 work in ancillary companies.
- Pharma sector products represent 50% of Milan’s exports, growing 3% since 2014.
- Head of Mayor Sala’s cabinet, Mario Vanni, is driving this objective forward, and noted that Milan has many advantages, particularly in quality of life and real estate, having very competitive prices for office space.
- The Mayor’s cabinet is also preparing a document with the Ministry of Economy and Finance a dossier about Milan to present to investors and the international press; the city has also placed an announcement advertising for a manager to promote the city and its brand around the world.
- Select Milano is briefly mentioned at the end as helping Milan to promote itself post-Brexit. It is also helping to put in place the necessary regulatory and bureaucratic steps to be consistent with EU requirements.
By Bepi Pezzulli
1 February 2017
Summary from Italian:
- Post-Brexit London will be able to pursue its four markets of interest without having to follow EU obligations: Chinese, Islamic, fintech and clean energy trading.
- London has in the pipeline greater fiscal competition measures, as well as plans for greater trade liberalisation which will make it a “23rd century city”.
- According to TheCityUK political director Gary Campkin, while the UK has seen great success in the export of EU financial services, In the next 10 years 90% of economic growth will come from Asia, so the UK should be focused on emerging markets like China or India.
- Thanks to Mark Carney, China’s yuan has been admitted as a “reserve” currency in the IMF.
- The Bank of England and the People’s Bank of China have also put yuan transaction clearing in London.
- Mervyn King sees that the huge segments of shadow banking, private debt and P2P lending in London can produce significant efficiency savings and economic growth; it will make sense to capture more of the private banking market which is more stable and attractive than corporate finance, thus helping to offset the extra risk associated with alternative finance.
- After the financial crisis of 2008, the Bank of England was left alone to solve internal problems limited by EU-imposed rules; however, it now has the freedom to rethink its entire economic paradigm. It can work towards its own version of Abenomics (referring to the policies and reforms of Shinzo Abe of Japan).
- Philip Hammond suggested the harmonisation of the BoE and the Treasury; this would be a brave move, but could help to end austerity.
By Roberto Tasca
4 February 2017
Summary from Italian:
- In recent years, Milan has seen significant civil, economic and cultural growth, becoming an attractive and truly cosmopolitan city. The city government’s newfound credibility has allowed it to define objectives and strategies in consultation with regional and national institutions, and its dedication to transparency and efficient budgeting has allowed it to attract new international investment and compete with other European capitals. Given this, it would make sense for Milan to take advantage of the Brexit opportunity.
- Milan can build upon its pre-existing links with the LSE to make this a reality. Mayor Giuseppe Sala has had various meetings in London with figures from the worlds of business and finance to discuss the possibility of transferring their operations to Milan. Goldman Sachs and Nesta have both raised the possibility of moving some operations to Milan.
- Milan is an ideal geographic location, with excellent facilities for its residents and workers, and various infrastructural developments in the pipeline. The government has also put in place new tax cuts to help facilitate the transfer of workers post-Brexit.
- Another potential win for Milan could be the impending transfer of the European Medicines Agency – Milan is now an official nominee in the race to open its doors to the institution.
- Milan is working to promote itself, with the possibility of conducting roadshows in London and other European cities. As a tourist destination, it saw 4 million visitors in 2016 – an increase even over 2015 when the city hosted the Expo.
- Milan is working with the central government to achieve its objectives, and is confident that it can attract both the EMA and Euro clearing activities.
Milan and Brexit:
By Nick Squires
1 February 2017
Italy is to set up a task force to lure businesses and investors from the City to Milan in the wake of Brexit, the country’s foreign minister announced.
Angelino Alfano said the government would aggressively promote Italy’s financial capital as a viable alternative to London.
“We’re going to set up a task force. The government is on Milan’s side in the post-Brexit game,” the minister said at a conference in Rome. “Who says that businesses that leave London should all go to Frankfurt? We need to be able to attract to Milan businesses that decide to leave London.”
Brexit offered many opportunities for Italy, “and we need to work to make Milan a highly-competitive city in the post-Brexit era,” Mr Alfano said.
The capital of the wealthy Lombardy region, Milan is home to Italy’s main stock exchange, has two airports and boasts Bocconi University, one of Europe’s most acclaimed for business studies and finance. The city’s profile was boosted last year by the success of the Expo world fair, which attracted 20 million visitors, and its fashion and food are big draws for foreigners.
But Milan’s ambitions to lure away firms from the City face numerous obstacles, from language to labour laws. Italy has one of the lowest levels of English language proficiency of any country in the EU – only 34pc of Italians have a working knowledge of English, according to a study by the European Commission – and firms looking to leave the UK might instead opt for Dublin rather than Milan.
High social security costs mean that employees in Milan are more costly than those in London and rigid labour laws make it harder to make workers redundant.
Italy’s legal system is also notoriously slow and inefficient, with court cases dragging on for years and even decades. In the latest annual Ease of Doing Business Survey by the World Bank, Italy ranked 50th out of 190 countries, placing it behind Serbia, Belarus, Moldova and Armenia. Britain ranked seventh.
The survey measures how easy or hard it is to start a business, register property, obtain credit, pay taxes, enforce contracts and resolve insolvency, among other factors.
“In the current cost-conscious environment, I think companies will be concerned at how much more it costs to set up a business in Milan and how much harder it is to get rid of people if needed,” said a British corporate lawyer familiar with both Italy and the City. “Italy’s labour laws make it difficult to fire employees. I think Dublin is a much more attractive proposition.”
By Alberto Mattioli
28 January 2017
Summary from Italian:
- Brexit provides a great opportunity for Milan to be promoted as the new financial capital of Europe by bringing Euro clearing activities to the city.
- The parliamentary Finance Committee’s approval of the EEIG shows its commitment to helping Milan take up these responsibilities.
- Milan appears to be the best place to move the Euro clearing activities to because of its pre-existing ties with the LSE – helping to keep profits within the LSE Group.
- Further, Milan is richer and more populous than key competitor, Frankfurt, and holds a better infrastructure to house Euro clearing activities.
- Milan also offers high-level international schools, prime real estate, a diversified industrial base and unrivalled cultural vibrancy, thereby already having an ecosystem for excellence.
- Though Italy has a lower GDP than Germany, private capital is higher.
- Milan does not threaten London, and Italy needs a growth engine to drive forward the country’s system – moving financial activities to Milan would help to bring thousands of new jobs and increase tax revenue.
By Pietro Paganini
4 February 2017
Summary from Italian:
- It is asserted that London wants to become a free economic zone and attract the world’s billionaires. Its growth strategy entails attracting Chinese and Islamic finance, fin-tech and clean energy trading.
- Acting as an offshore centre to other European capitals, London could capture the private banking market, making it more stable and attractive than the volatile corporate finance market.
- In order to find an alternative to London, European cities like Amsterdam, Barcelona, Berlin, Frankfurt, Madrid, Milan and Paris must organise themselves to set up a network of specialised cities, each able to attract investors and visitors more and better than London. In Italy, Milan is the only city capable of competing in such a scenario.
- Transferring Euro clearing activities to Milan, for example, would allow the profits to remain on the balance sheet of the LSE while leaving Milan to create jobs and induce growth.
4 February 2017
Summary from Italian:
- Finance Committee chair Maurizio Bernardo stated that a team of 100 experts is ready to form networks to make progress on all initiatives to bring business from London to Milan post-Brexit, particularly the European Medicines Agency. €50 million has been allocated by the government on this front.
- This team, comprising figures from academia, finance and non-profits, has already been meeting for months in Milan and Rome on various projects and proposals related to this initiative.
- It is also noted by Il Giorno that the government is making moves to attract the Unified Patent Court, as well.
By Giuseppe Papalia
4 February 2017
Summary from Italian:
- Article which asserts that Italy will have trouble attracting business post-Brexit because of various internal problems within the country, including uncompetitively high rates of taxation, slow bureaucracy and an inefficient judiciary. Real long-term reforms are needed, not simply “economic diplomacy”.
Europe and Brexit:
By Daniel Boffey
1 February 2017
The European commission’s Brexit negotiators must strike a “workable” deal with Theresa May’s government to protect the City of London or the economies of the remaining member states will be damaged, a leaked EU report warns.
The document – which has been seen by the Guardian – describes it as critical for the economic health of the remaining member states that the current financial eco-system is not hit in the coming Brexit negotiations.
The paper, drawn up by officials working for the European parliament’s powerful committee on economic and monetary affairs (Econ), warns that UK-based financial services account for 40% of Europe’s assets under management and 60% of its capital markets business. “And UK-based banks provide more than £1.1tn of loans to the other EU member states,” the Econ secretariat’s paper notes.
“If financial services companies choose to leave the UK as a result of Brexit, the consequences should be carefully evaluated.
“A badly designed final deal would damage both the UK and the other 27 EU member states.
“The exclusion of the main European financial centre from the internal market could have consequences in terms of jobs and growth in the EU. It is in the interest of EU 27 and the UK to have an open discussion on this point.”
The warning echoes recent comments from the governor of the Bank of England, Mark Carney, when he claimed there are “greater short-term risks on the continent in the transition than there are in the UK”. Last month, the European commission Brexit negotiator Michel Barnier was also reported to have told MEPs that with the City “there will be a special/specific relationship. There will need to be work outside of the negotiation box … in order to avoid financial instability.”
Barnier later denied making the remarks. “When asked on equivalence I said: EU would need special vigilance on financial stability risk, not special deal to access the City,” he tweeted.
Equivalence is the mechanism whereby the UK’s regulations and the EU’s are to be regarded as of being of equal standing, allowing British-based financial institutions to continue to operate across the EU post-Brexit.
However, the 26-page document, titled Impact of the UK withdrawal on Econ areas of competence, and dated 13 December, notes that an analysis of offering equivalence status to the UK has been designated as a priority by “Econ coordinators”.
It says: “Given the considerable interdependence between the UK and the EU economy and financial systems, it is critical that a workable agreement is achieved that not only maintains high regulatory standards but also delivers growth and jobs across the EU …
“As an overriding principle, one can assume that after Brexit, the closer the UK remains to established EU regulatory standards, the greater the degree of access the UK can have to the single market – and vice versa, without prejudice to other considerations (eg the principle of the unity of the four freedoms).
“If the UK does leave the single market and thereby resigns from the four freedoms and the jurisdiction of the court, then consideration could be given to tools such as third country/equivalence passporting regime, and this should be taken into account on existing regimes as well as future pieces of financial legislation: eg on securitisation.”
The revelation will provide some reassurance to the secretary of state for exiting the European Union, David Davis, as Britain prepares to trigger article 50 negotiations on 9 March. His claims in recent months that the EU has more to lose than the UK from the City’s sudden departure from the EU’s regulatory framework had been scoffed at by European diplomats.
It will also provide the government with some firepower as the UK parliament debates the bill that will give Theresa May the power to trigger Brexit talks.
Along with the risks the Econ committee sees in Brexit, the report does also foresees some positives for the EU’s policy agenda in the UK’s withdrawal from the European institutions.
The commission has recently proposed a single set of rules for the calculation of companies’ taxable profits in the EU. The common consolidated corporate tax base would ensure that profits are shared between the EU member states in which a company is active.
The report notes: “While it is expected that the UK would oppose the CCCTB proposal (as was the case for the 2011 CCCTB proposal), the UK’s departure from the EU may increase chances of reaching the required unanimity in council – although the UK is not the only member state to have opposed the CCCTB, and opposition from other member states is likely to remain.”
It also suggests that the UK would have opposed a commission proposal for a “double taxation dispute resolution mechanism”, whereby companies and individuals would have recourse to a pan-European body if they were being taxed on the same profits by multiple national revenue bodies.
“While the UK may support the proposal in principle, it is rather unlikely that the UK would agree to a binding mediation and a decision-making body at EU level,” the document says. “Again, the UK’s departure from the EU may therefore increase chances of the proposal reaching the required unanimity in council.”
By Lana Clements
30 January 2017
A special conference to entice financial heavyweights out of the UK has this week been laid on by Germany’s Bafin financial regulator.
And during the invite-only event, the watchdog is telling around 50 representatives from 20 banks how they can shift operations to Frankfurt following Brexit.
Goldman Sachs, Morgan Stanley and Citigroup are among the top US firms that are thought to have been invited and attended the work-shop.
The European Central Bank and Germany’s central bank Bundesbank were also reportedly at the event.
Germany is keen to secure new jobs amid reports some firms are looking at moving some roles to the continent.
However, Goldman Sachs recently played down reports that it is moving staff.
Citigroup has not made any public decision on job movements, despite reports that it’s also looking to transfer roles.
The event was held in Bafin’s Frankfurt office.
Peter Lutz, a Bafin official in charge of bank oversight defended the event.
He said: “Brexit is … no reason for celebration. But we have to be pragmatic.”
Hubertus Vaeth, head of Frankfurt Main Finance, a group backed by local government to promote the city, has predicted that 10,000 jobs will move from London to Frankfurt over five years.
Theresa May recently confirmed that Britain would leave the single market as it departs from the EU, which means banks are likely to lose so-called passporting rights that allows firms to sell goods and services across the bloc.
The Prime Minister outlined her Brexit vision and allayed business fears that there would be a cliff-edge exit.
Mrs May also reportedly met with the leaders of Wall Street banks to hear Brexit concerns.
She said her idea of a “global Britain” would keep posts in the UK.
JP Morgan and HSBC have said that parts of their businesses would be moved in response to the divorce from the union and Mrs May’s decision to rule out single market membership.
Paris is vying with Germany to try to steal London’s crown as a financial centre.
By Ivana Kottasova
1 February 2017
From Frankfurt to Warsaw, European cities are preparing to welcome London’s bankers.
British lawmakers are expected to vote Wednesday to authorize Prime Minister Theresa May to start the formal process of pulling the U.K. out of the European Union.
Britain’s departure is likely to spark an exodus of bankers who need to move abroad in order to safeguard their European operations.
Cities around Europe are welcoming them with open arms. Madrid, Amsterdam, Berlin and Lisbon have been mentioned as possible contenders, but the following five cities are the frontrunners in the quest to attract bankers:
Frankfurt is a natural choice for many banks. The German city is home to the European Central Bank, the Bundesbank, as well as the European Insurance authority.
The German Federal Financial Supervisory Authority hosted 50 representatives from some of the world’s biggest banks on Monday to explain the steps required to set up a business in Germany.
“As committed Europeans, we do not see Brexit as a reason to celebrate,” said Peter Lutz, the authority’s deputy head of of Banking Supervision. “But now we need to take a pragmatic approach and offer institutions the necessary supervisory clarity for their strategic decisions.”
Paris, only a short train trip from London, is hoping to boost its financial services sector by attracting bankers fleeing Brexit. The city launched an advisory service for companies that want to relocate from London following the U.K.’s vote to leave the European Union.
HSBC, (HBCYF) Britain’s largest bank, has already said it could move roughly 1,000 jobs from London to Paris.
Financial services firms in Paris manage 2.6 trillion euros worth of assets, according to the French government. The city is also home to Euronext, Europe’s second largest stock exchange, which is just behind London in terms of transaction volume and stock market capitalization.
Paris is also key for the bond markets; firms in Paris carry out nearly 35% of total bond issues in the eurozone.
However, some banks are concerned about strict French labor laws.
Luxembourg is eying the private equity firms operating in London. Like banks, they are able to operate across the EU if they set up business in any of the member states. After the U.K. leaves the EU, firms based there will likely lose these rights.
Blackstone Group (BX), one of the world’s largest private equity firms, said it already took steps to make sure it has the right to operate in Luxembourg.
There are plenty of advantages to Dublin: English as the main language, same time zone as London, low corporate tax rate.
Plus more than half of the world’s leading financial services firms already have subsidiaries in Dublin, according to the city’s International Financial Services Centre.
Barclays (BCLYF), which already operates a subsidiary in Ireland, said it is considering an expansion of its operations in Dublin.
Dublin is home to the European headquarters of major tech companies, including Google (GOOGL, Tech30), Facebook (FB, Tech30), Dropbox and Twitter (TWTR, Tech30).
Krakow, Warsaw & Wroclaw
Poland is not a member of the eurozone, but is still hoping to attract financial services back office and support jobs. Foreign companies already employ 177,000 people in Poland in offshore business services.
The Polish Association of Business Service Leaders said the country is the international business service sector leader in Europe.
By Gavin Finch
31 January 2017
Frankfurt and Dublin are emerging as the biggest winners at London’s expense as banks prepare for Brexit by planning new hubs in the European Union.
Standard Chartered Plc and Barclays Plc are considering choosing Ireland’s capital as their EU base for ensuring continued access to the bloc, according to people with knowledge of their contingency plans. Goldman Sachs Group Inc., Citigroup Inc. and Lloyds Banking Group Plc are eyeing Frankfurt, other people said.
Banks are fleshing out their plans after Prime Minister Theresa May announced in January that the U.K. would leave the EU’s single market in 2019, likely spelling the end of passporting, where banks seamlessly service the rest of the bloc from their London hubs. Frankfurt is a natural pick for firms fleeing London given a financial ecosystem featuring Deutsche Bank AG, the European Central Bank and BaFin, one of the only regulators with experience overseeing complicated derivatives trading.
As for Ireland, it’s presenting itself as a low-tax, English-speaking location with similar laws and regulations to Britain.
All told, TheCityUK lobby group reckons as many as 35,000 jobs could be relocated out of the U.K. Dublin could potentially gain between 12,000 and 15,000 jobs as a result of Brexit, Goodbody Stockbrokers has said. Bloomberg News conducted interviews and reviewed public statements to discover what each major bank is now planning.
The Wall Street firm is considering making Frankfurt its main hub inside the EU and could move as many as 1,000 employees, including traders and senior managers, according to a person familiar with the matter. Chief Executive Officer Lloyd Blankfein has publicly said the bank has shelved plans to move more key operations to the U.K.
“We were on track to move more and more of our global activities, so global ops, global tech — all those things made more and more sense to operate out of the U.K.,” because of the time zone, Blankfein said in a Bloomberg interview in Davos, Switzerland, in January. “Now, we’re slowing down that decision, and only moving there what we have to move there. We don’t value doing things twice; moving them there and then moving them away from there.”
“We have to accommodate the laws of the land in both Britain and the EU, and that will determine how many jobs and how many people you have to move,” JPMorgan Chase & Co. CEO Jamie Dimon said in Davos earlier this month. “It looks like there will be more job movement than we hoped for.”
Before the referendum, Dimon said as many as 4,000 of its 16,000 U.K. employees could be moved to the continent after Brexit.
“Yes, we will have to move bankers — we have an SE in Frankfurt, we have an appropriate setup in Spain,” Andrea Orcel, head of UBS Group AG’s investment bank, said in Davos, referring to the Swiss bank’s German subsidiary, which is licensed to do investment banking. “We still have flexibility to decide where to go, but we will definitely have to move.”
CEO Sergio Ermotti has said he may have to move as many as 1,500 of about 5,000 U.K. investment banking staff. Some of those employees may be relocated to Madrid, Bloomberg reported last week.
HSBC Holdings Plc CEO Stuart Gulliver said in January that staff generating about 20 percent of its London investment-banking revenue may move to Paris, where it acquired a French commercial bank more than a decade ago. “Activities specifically covered by EU legislation will move,” he said.
Before the June referendum, Gulliver said a Brexit vote would likely result in about 1,000 of the bank’s 5,000 London-based staff relocating to the French capital.
The U.K. bank has settled on Dublin for its main hub inside the EU and is planning to add about 150 staff there, people with knowledge of the decision said last week.
Barclays CEO Jes Staley has struck a different tone to other bank bosses. He said in Davos that it would be “very difficult” to dislodge a financial center like London. If needed, Barclays may reassign its Frankfurt branch to its Irish subsidiary, he said.
“Same people, same traders, you have to book a trade in Ireland as opposed to London, but that’s not a wholesale move of our capability from London to Ireland,” he said.
The bank approached Irish officials about making Dublin its legal base inside the EU, people familiar with the discussions said in December. No final decision has been taken, and the firm is also in talks with Germany’s regulator about choosing Frankfurt.
Citigroup is evaluating locations for parts of its London broker-dealer business, including Ireland, Spain, Italy, Germany, France, and the Netherlands, Jim Cowles, the bank’s top executive for Europe, the Middle East and Africa, said at a conference in Dublin on Jan. 24. Cowles said he expected the bank would make a final decision by the end of the first half.
Bloomberg News reported in November that the firm was in discussions with BaFin about moving some of its London-based equity and interest-rate derivatives traders to Frankfurt. Citigroup is also in discussions with the ECB and regulators in EU nations including Ireland about relocating other parts of its operations.
Before the vote, Bloomberg News reported that Morgan Stanley would likely move 1,000 of about 6,000 U.K. employees out of the country in the event of Brexit. Morgan Stanley President Colm Kelleher said the firm would likely move its local headquarters to Dublin or Frankfurt.
“If we are outside the EU, and we don’t have what would be a stable and long-term commitment to access the single market, then a lot of the things we do today in London, we’d have to do inside the EU-27,” said Rob Rooney, CEO of Morgan Stanley International, after the vote.
Morgan Stanley executives said New York would likely be the big winner from Brexit as U.S. firms would probably allocate headcount away from Europe altogether.
Daiwa Securities Group Inc. CEO Takashi Hibino said the Japanese brokerage is considering Frankfurt and Dublin among candidate cities to host European operations it moves out of London. The firm, the majority of whose 450 European staff work in London, has yet to establish a licensed entity in the EU, and is running simulations with consultants.
Lloyds Banking Group
The U.K. bank plans to convert its Frankfurt branch into a subsidiary, making that its base inside the EU, a person with knowledge of the matter said earlier this month. A small number of people would move from London. The bank has yet to apply for an extension of its German banking licence.
Bank of America
“You’ve got to get your legal entity structure correct so you can operate in two different environments: one inside the U.K. and one outside,” Bank of America President Brian Moynihan said in Davos. “We already have a lot of that structure set up. Then you have to start think about where locations are, but I think that’s a bit premature.”
Credit Suisse is exploring options for expanding in Dublin after Brexit, two people with knowledge of their plans said last week. Board member Noreen Doyle said at a conference in Dublin on Jan. 24 the bank was in the “early stages” of examining alternatives to London after Brexit.
Bank of China
Bank of China Ltd. is in talks with Irish officials about potentially moving some of its U.K. operations to the country after Brexit, Ireland’s Sunday Independent newspaper reported.
Sumitomo Mitsui Financial Group
Sumitomo Mitsui Financial Group Inc. is also eyeing moving some of its U.K. employees to Ireland and has held a series of meetings with local regulators, the Sunday Independent reported.
6 February 2017
Paris once again made a move to profit from all the uncertainty around Brexit by sending a crack team to London to woo bank and finance chiefs back across the Channel.
The French government and city leaders in Paris have made no secret of their desire to take advantage of the insecurity of some finance firms in London with Brexit looming large.
Since the British public voted for EU divorce last June, France has taken several steps to entice companies and banks to up sticks and move across the Channel. They’ve cut red tape and even published documents in English.
In January there was perhaps proof that the charm offensive was working when HSBC said it would likely switch 1,000 jobs to Paris from London given Britain’s departure from the EU.
On Monday the French capital, one of many European cities fighting for post-Brexit business, stepped up its offensive by sending dignitaries to London to meet with bankers, insurance firms and asset managers to persuade them to move their activities to Paris.
“The battle is tightening between Paris and Frankfurt,” said a spokesperson for Valerie Pécresse, the head of the Ile-de-France region, who led Monday’s raiding party to London.
Alongside Pécresse will be Gérard Mestrallet, who is president of Paris Europlace, the body responsible for promoting the French financial sector.
Mestrellet will present a comparative study demonstrating the attractiveness of Paris.
He will be accompanied by Australian Ross McInness, who was appointed ambassador to the new one-stop shop called Choose Paris Region.
It was set up in November to provide firms everything they and their staff needed to relocate across the Channel.
“Anyone who’s worked in France for the last few years knows to go beyond some of the cliches and look at hard facts, hard figures,” he told Reuters at the time.
“This is a business-friendly country,” he said, before telling journalists “When was the last time you booked a weekend in Frankfurt?”
However despite the push to make Paris seem more attractive to international firms, there are some, including the World Bank, who believe the country has a long way to go before it can really rival other global cities for business.
In October the World Bank gave France a reality check in its bid to attract Brexit business.
In its global ranking Doing Business 2017 France was placed down in 29th position for the “ease of doing business”, one lower than the previous year’s position.
While 29 out of 190 doesn’t sound bad, when you consider the likes of Georgia, Macedonia and Latvia are ahead of France, it doesn’t look so rosy.
No disrespect to those countries, but it’s clearly not where France would want to be as it is desperate to see its economy grow and to woo business from Britain.
By Pat Leahy
30 January 2017
In a file held on the Government’s secure computer system there is a document containing a list of EU countries.
They are classified according to their resistance to the idea of Ireland securing some sort of special arrangement in the Brexit negotiations which deals with the Border and the “unique circumstances” – a phrase beloved of the Department of Foreign Affairs – of the British-Irish political, economic and social relationship.
They are not listed as friends or enemies, just as requiring more or less attention as officials and politicians attempt the delicate task of positioning Ireland for the least negative outcome from the negotiations on Britain’s exit from the EU.
The list and the associated intelligence it represents is the product of a diplomatic, political and official campaign that has been taking place since early last autumn.
Hundreds of meetings, contacts and conversations have been conducted by politicians and civil servants with their EU counterparts in Brussels and in European capitals in recent months.
In these they have sought to firstly outline the disproportionately serious consequences of Brexit for Ireland, and then to explain why solutions proposed by Ireland will not offend other member states’ interests or EU norms.
Senior officials and political sources who spoke to The Irish Times on condition of anonymity detailed an extensive campaign under way to manage Brexit that one senior mandarin likened to a cross between running the six-monthly EU presidency and implementing the Troika bailout.
Except on this occasion, there is no clear destination.
Last Thursday the Cabinet sub-committee on Brexit met for the sixth time in Government Buildings.
The meeting went on for two hours, and the politicians and senior officials there were presented with a series of documents, some of which have been seen by The Irish Times, which detailed the progress so far and the objectives for the coming months.
On Monday the Taoiseach meets the British prime minister Theresa May, and next week he will travel to Poland. Shortly after that Mr Kenny will travel to The Hague.
The work is mainly divided between the Department of Foreign Affairs and the Department of the Taoiseach.
In Iveagh House, the headquarters of the Department of Foreign Affairs, the key figures are Rory Montgomery and Adrian O’Neill, head of the Anglo-Irish division, and the secretary general Niall Burgess.
In Government Buildings, the second secretary general, John Callinan, leads the Brexit planning, while secretary general Martin Fraser – the State’s most senior civil servant – oversees how Brexit preparations influence the work of the Cabinet and the Cabinet committees.
In official circles there is some bemusement at accusations that “nothing is being done” to prepare for Brexit.
If anything, some officials say, some important work is being neglected because there is so much internal focus on Brexit.
In recent times, Irish officials have been flying to meetings around Europe to explain why they believe the retention of the Common Travel Area after Brexit would not be in contravention of EU law.
Last week, they were in Paris where a team of high-ranking officials and diplomats held a lengthy series of meetings over several hours with their French counterparts discussing a range of Brexit-related issues.
The Irish position is that the Common Travel Area – legally and practically – can continue completely independently of Britain’s decision to leave.
The officials have conceded it would result in Irish citizens enjoying rights and entitlements in the UK – the right to reside permanently, work and avail of public services, for example – that will not be automatically available to other EU citizens.
However, they have been pointing out that this was the case long before EU membership, and have been arguing strongly that this will not violate European law.
“That’s the law. Though the politics can be different,” says one person involved in the process.
The response, insiders say, has been largely but not uniformly positive on the Common Travel Area.
Officials and politicians believe that most EU countries will not object to the proposals that will come from the Irish Government, though others may be more problematic.
They are tight-lipped about where the problems are likely to be – the list is a closely guarded secret – though official gossip suggests that some central and eastern European countries are proving sticky.
“We are getting some nervousness alright,” says a source.
Another source says that it is not so much that the newer member states in the east are not sympathetic but that they do not have the same familiarity with the Irish situation accumulated over the decades as the older EU members.
Officials say that everyone is annoyed with the British. But some are more annoyed than others.
“A lot of countries don’t have big trading interests with the UK. Some are still using the word ‘punishment’,” says one senior official.
This is a problem for Ireland because it is clear that Ireland’s interests coincide with British objectives to a large degree – not something that Ireland will stress but something which the others can probably work out for themselves.
Ireland wants as close a trading relationship between the UK and the EU as possible after Brexit.
The last thing Ireland wants is for Britain to be “punished”. That will lead, sources expect, to differences on the EU side of the table between Ireland and some of the other member states.
Ministers stress at every opportunity that Ireland is on the EU side of the table. But it is likely to have differences with some member states.
There is constant contact with the British government.
Despite the clear position – they sound at times like instructions – emerging from Brussels (repeated again last week by visiting economic affairs commissioner Pierre Moscovici) that there should be no negotiations with the British until article 50 is triggered, Irish Government officials are involved in pretty much a rolling conversation with their British counterparts.
Senior official contact was formalised in 2012 when an annual meeting between top mandarins in both governments was instituted (it was in London last October), but, more importantly, people have the email addresses and mobile numbers of each other.
“We’re not negotiating. But we are in constant touch with them, yes,” says a high-ranking source involved in the contacts with the British.
“We accept the rule on no negotiations. But you have to explore the issues. We don’t regard it as a breach of the rule.”
So what has all this activity produced so far?
Officials are satisfied that the Government appears to be making good progress on the retention of the Common Travel Area.
Word has reached Irish Embassies around the continent that Michel Barnier speaks about it as an early priority in the negotiations when he is speaking to other governments.
However, the question of EU-UK relations – and, therefore, British-Irish trade and the role of customs at the Border – remains deeply uncertain.
Senior sources say that the pretty broad EU view is that trade is an EU competence, and if and when the British do exit the customs union then the arrangements with Ireland will be the same as the arrangements with the rest of the EU. If that involves tariffs, it involves tariffs.
There will be, officials expect, some EU understanding about how the Border should work in the future, with other countries understanding the Irish position that it should be as soft or invisible as possible.
There may even be some local arrangements for agricultural products that cross and re-cross the Border, speculates one source.
But a special arrangement for Ireland on trade seems very unlikely.
“The idea that Ireland has a unique position on trade is not really being entertained,” says one senior figure.
That will mean a significant economic impact in Ireland. But it will also affect the broader relationship between Ireland and the UK.
The ties will not be undone, but they will change and economically they will loosen.
In their idle moments, the officials tasked with managing all this sometimes wonder about the magnitude of it all.
One senior figure suggests that Brexit could result in “potentially quite fundamental shifts” in both the relationship between the North and the South, and the relationship between Ireland and the UK.
“It’s going to change the world we live in,” he says. “That’s the reality, that we have to accept.”
By Peter O’Dwyer
6 February 2017
Office space in Dublin is set to boom this year but the Brexit effect will ensure that the space is not wasted, research has indicated.
HWBC, the commercial real estate agency, said that it expected companies to move to Ireland, eliminating any risk of the oversupply problems that had dogged previous property cycles despite the sharp rise in such space due for completion this year.
Completions are expected to increase by 184 per cent with a total of 2.3 million square feet expected to become available.
Tony Waters, managing director of HWBC, said that a “strong pipeline” of potential movers to Dublin from London after the Brexit vote should be more than sufficient to meet the increase in supply.
“There is potential for up to five million square feet of office space to be delivered in Dublin over the next few years with schemes at various stages of the planning process. However, much of this space will not be delivered without significant pre-lets in place, so at current levels of construction we see no risk of oversupply as happened in previous cycles,” he said.
Rents are set to rise by 8 per cent — in line with last year’s increase of 9 per cent — as a more modest level of growth continues, according to HWBC.
Between 2012 and 2015 the Dublin office market rebounded strongly with double-digit rent increases. Rents doubled since their lowest point in 2012.
Further demand should help drive prime rents up by another 8 per cent to €65 per square foot by the end of the year.
“Whilst rental growth in the office market in Dublin has eased from the double-digit levels of 2012 to 2015, prime office rents rose by a very respectable 9 per cent and will grow by a similar level in 2017, helped by the Brexit demand that is clearly now coming through with plans to expand in Dublin by investment banks like Barclays and Credit Suisse emerging in recent days,” Mr Waters said.
“Demand may come from companies moving 100 or 200 staff rather than moving thousands but it will still have a very positive impact given the supply constraints in the market.”
Paul Scannell, director at HWBC, warned, however, that a lack of suitable housing in Dublin could scupper the flow of foreign direct investment into Ireland in the coming years.
External threats such as President Trump’s protectionist trade policy and the uncertainty surrounding elections in France and Germany this year could potentially rock the Dublin market but a lack of housing is the most pressing concern in the market, he said.
“The minority government must address the challenges in the residential property market, where a lack of new supply and rental accommodation at affordable rates could have negative consequences for winning Brexit business and foreign direct investment,” Mr Scannell said.
HWBC’s research also showed that the office vacancy rate at the end of December stood at 7.8 per cent compared to the peak rate of 22.8 per cent in 2010 and 9 per cent at the end of December 2015.
The average deal size for new leases last year was 1,200 square metres, with 201 transactions taking place in 2016. Amazon committed to 171,000 sq ft in the Vertium Building on Burlington Road and Grant Thornton agreed to take up 104,000 sq ft in City Quay development in Dublin 2.
By Karen Gilchrist
31 January 2017
Global investors with operations in the U.K. looking to relocate have identified Germany as the top destination following Britain’s decision to leave the European Union, according to the latest EY study.
Brexit has caused global investors to reassess their assets in the U.K., with 14 percent of foreign investors with a presence in the U.K. saying they now plan to change or relocate some of their European operations in the next three years should the U.K. leave the single market.
Germany was identified as the preferred destination for those investors moving out of the U.K. (54 percent), followed by the Netherlands (33 percent) and France (8 percent).
Already, seven in ten foreign investors say they have been impacted by Brexit, particularly with regards to operating margins, purchase costs and sales.
The financial services industry has been one of the hardest hit by the vote and remains the least optimistic about the outlook ahead. Just 12 percent say they anticipate strong growth while 6 percent are expecting to “slightly reduce” their existing presence in the region.
Earlier this month, UBS and HSBC warned that they could each move about 1,000 jobs out of the U.K. as they prepare for trading disruption.
According to EY’s study, Brexit and European Union stability were cited as more fundamental concerns for financial services firms than for manufacturing firms.
The study also found global investors plan to grow their presence in Europe over the coming years despite recent geopolitical uncertainty that has dominated the region.
The findings in fact note an uptick in investor sentiment over the past year, and in particular since the U.K.’s shock Brexit vote, going some way in dispelling wider concerns about the impact of political upheaval on underlying investment behaviour.
EY’s study of 254 global investors found that more than half – 56 percent – say they plan to grow their exposure to Europe over the next three years. This is up from May 2016, one month prior to Brexit, when just 36 percent of Europeans said they were optimistic about the future of Europe.
The results come as leadership races heat up in the Netherlands, France and Germany and Britain comes forward with greater details on its impending departure from the EU.
While not entirely unfazed by the political landscape, of greater concern to investors is volatility,particularly with regards to currencies, commodities and capital markets. 37 percent said these fluctuations posed the greatest risk to their investment decisions, while economic and political instability within the EU (excluding Brexit) worried 32 percent and Brexit itself concerned 28 percent.
Andy Baldwin, EY area managing partner for Europe, Middle East, India and Africa, said the findings were reassuring but warned against complacency.
“It is encouraging that the investors we are tracking continue to have strong investment appetite in Europe despite the instability and mixed geopolitical environment. However, investor patience is finite. Europe’s historical investor appeal was built on certainty and predictability.
“Europe is in danger of developing an emerging market ‘geopolitical risk profile’ without commensurate returns. For the foreseeable future, pure economic factors will vie alongside political considerations in influencing final investment decisions.”
By Sam Meredith
3 February 2017
Frankfurt expects up to 10,000 financial industry workers to relocate from Britain to Germany’s banking capital as a consequence of Brexit, according to a Frankfurt lobby group.
“We’re going to benefit most,” Hubertus Vath, managing director at Frankfurt Main Finance, told reporters in London on Thursday.
“Within the eurozone you need to be in Frankfurt to service the area,” he added.
Several U.K. based banks are poised to announce at least part of their business operations are being moved from London to another European city, with countries on the continent scrambling to attract top financial officials.
City lenders are attempting to maintain their services throughout the bloc as the U.K. begins its withdrawal from the European Union (EU).
Brexit negotiations have not yet started, however, the U.K. took a step closer to beginning formal negotiations with the bloc as parliament cleared its first legislative hurdle. The U.K. parliament voted overwhelmingly in favor of starting the formal two year negotiation process with the EU on Wednesday.
Britain could be set to complete the legislative process by March 7 which would meet Prime Minister Theresa May’s self-imposed April deadline.
UK has 80% of EU ‘high earners’
Angela Merkel’s financial powerhouse has been touted as a potential relocation hotspot for London’s bankers given it can boast somewhat of a financial hub given its significant euro flows and the presence of the European Central Bank.
However, Frankfurt is reasonably small in size, has a relatively unexciting reputation and must compete with several other European cities. Paris is a key competitor of Frankfurt although smaller cities such as Amsterdam, Dublin and Luxembourg are also vying to lure banks, insurers and fund managers throughout Brexit negotiations.
The U.K. reportedly has over 80 percent of the continent’s “high earning” financial professionals, according to the latest research by the European Banking Authority.
Britain boasts 4,133 of the 5,124 bankers, fund managers and compliance professionals across the EU that earned over 1 million euros ($1.07 million) in 2015, according to the new research.
The European Banking Authority is based in London although has announced it would leave its office post-Brexit.
By Rob Merrick
3 February 2017
Angela Merkel has hit back at Theresa May’s threat to slash taxes to undercut the EU if it blocks a Brexit deal, warning taxes are the price paid for a just society.
The German Chancellor insisted her country had no intention of joining a race to the bottom, by following in the footsteps of Britain and Donald Trump.
“We have a tax system in Germany that has weathered challenges well. I see no reason for entering a race for who has the lowest corporation tax,” she said.
“We need tax revenues, we need a fair tax system, in order to make necessary investments in our society.”
Her rebuke came as EU leaders, angered by the new US President’s outright hostility to the bloc, made clear that the Prime Minister’s pitch to be a “bridge to Trump” – particularly over bolstering Nato – was not welcome.
The controversy over tax blew up at the EU summit in Malta after the Prime Minister said she would “change the basis of Britain’s economic model” if she failed to get her way in the withdrawal negotiations.
The comment was widely seen as a threat to turn the UK into an offshore rival to the EU, slashing taxes and regulations in order to lure reluctant foreign investment.
But the UK’s corporate tax rate is already set to fall to 17 per cent – below the EU average – raising accusations that it would have to become a fully-fledged tax haven to offset the damage from Brexit.
Revenues would plunge, critics say, at a time when the NHS is already in crisis and schools are facing spending cuts.
At a press conference in Malta, Ms Merkel was asked if Germany would “follow suit” if Britain and America carried on cutting business taxes – making clear it would not.
Ms Merkel did not answer when asked if Ms May had become “too close” to Mr Trump, after visiting the White House within one week of his inauguration.
The two leaders had not discussed the US President, she said – despite chatting on a lengthy walkabout during a break in the summit talks.
Downing Street was forced to deny a snub after formal post-lunch talks between the pair – tipped to be a highlight of the summit – were mysteriously cancelled, insisting all issues were covered in their short walkabout.
Ms Merkel said she was “gratified” that the Prime Minister had said she wanted to see a “strong EU”, even after Britain had left.
And she backed Ms May’s call for EU countries to spend more on defence, in return for what the Prime Minister has claimed is Mr Trump’s “100 per cent” commitment to Nato.
“We need to invest more in our defensive capabilities,” Ms Merkel said.
“There was a very clear commitment around the table towards Nato – and the American administration, meanwhile, has also come out with this commitment.”
Downing Street said the Prime Minister had, over lunch in Malta, raised her recent talks with Mr Trump, “urging other EU leaders to work patiently and constructively with a friend and ally”.
A spokeswoman said: “She said that the alternative – division and confrontation – would only embolden those who would do us harm, wherever they may be.”
Earlier in the day, other EU leaders had rebuffed the Prime Minister’s offer to be a “bridge” to the President, with French President François Hollande saying: “It is not about asking one particular country, be it the UK or any other, to represent Europe in its relationship with the United States.”
Meanwhile, Dalia Grybauskaite, the Lithuanian President, gave a sarcastic verdict, saying: “I don’t think there is a necessity for a bridge – we communicate with the Americans on Twitter.”
However, European Council President Donald Tusk was conciliatory about Mr Trump, saying: “What we need is as strong transatlantic friendship and relations as possible, and the UK can, inside Europe or outside Europe, the EU not Europe, can be very helpful.”
Ms May’s hopes for an early deal on the rights of British citizens living in the EU after Brexit were also given a boost, when Spain’s Prime Minister Mariano Rajoy agreed one was needed.
Nevertheless, Ms May’s strategy to go to the summit brandishing her coup in meeting Mr Trump first – apparently hoping to strengthen her hand in the Brexit talks – appeared to have backfired.
She carried the message from the new President that Europe must increase its defence spending in return for his “100 per cent” commitment to Nato.
But other EU leaders view the American leader with horror because of his hostility to the EU, his protectionism and controversial policies such as the travel ban from seven mainly Muslim countries.
Mr Hollande openly dismissed the idea of Britain as a bridge, pointing to Mr Trump’s welcoming of Brexit and insisting he should “not get involved”.
He said: “He may have his own views, but it is up to Europe to decide how many members there should be, and who should leave.”
And Joseph Muscat, the Prime Minister of Malta – which holds the six-month presidency of the European Council – said it was time for the EU to “lead at a global level”.
“We cannot stay silent where there are principles involved. As in any good relationship, we will speak very clearly where we think that those principles are being trampled on,” he said.
Tim Farron, the Liberal Democrat leader, ridiculed Downing Street’s insistence that Ms May and Ms Merkel had discussed all they needed to.
“I cannot imagine Theresa May seriously thinks a bit of polite chit-chat through the streets of Valletta replaces a serious bilateral meeting,” he said.
To add to the sense of her isolation – and in a signpost to the future – Ms May left the Maltese capital early, leaving the other leaders to continue the summit without her.
By William Turvill
30 January 2017
A Luxembourg-headquartered fund management company today announced plans for a Dublin office, in a move prompted by the UK’s Brexit vote.
FundRock, which has 70 staff in Luxembourg, is also due to move into the UK with the acquisition of Fund Partners, subject to regulatory approval.
It is understood that Ireland was chosen as a new office location in light of the Brexit vote. It was chosen because of its legal system, the English language and its business environment.
“There is significant uncertainty around the future of Single Market access,” Ross Thomson, head of the Dublin office, told City A.M.
“The solution FundRock offers now removes the uncertainty and provides clients with options and solutions insulated from geopolitical uncertainty and allowing clients to develop their international business in a model that overcomes the potential future barriers
“The current unknown situation around the future of the passporting of financial products means they FundRock can offer solutions to UK-based firms if the passport is lost.”
He added: “FundRock has already had numerous discussions with UK-based managers and have implemented a working group to monitor the situation closely and assist at each step of the process when article 50 is triggered.”
The Dublin office will initially have three staff, but will be seeking growth this year.
By Oscar Williams-Grut
5 February 2017
Britain’s financial services minister said the UK is in “a strong position” for Brexit negotiations and the government will push to “maximise the access” to the EU market.
Economic Secretary to the Treasury Simon Kirby told Business Insider: “It’s in Europe’s interests that London remains strong and competitive, as much as the UK’s.
“60% of European capital market business is conducted through the UK, banks in the UK are the largest borrowers and lenders of euros outside of the eurozone and when we talk about critical mass, when you look at the London Stock Exchange Clearing House, they’ve estimated that critical mass, that size of business, saves some £17 billion a year.”
Kirby, who’s main portfolio is financial services and the City, was speaking to BI the day after the Guardian reported on a leaked EU report suggesting Europe could suffer unless it gets a “workable” deal with the City as part of Brexit negotiations.
Kirby told BI at his Westminster office: “I am aware that there is a job to be done and the negotiations will be hard and will be difficult. However, I think we’re in a strong position and I’m confident that the future has many opportunities.”
‘We’ll want to maximise the access’
Two of the biggest Brexit issues in the City have been the possible fate of euro clearing and financial passporting.
European nations, particularly France, are keen to strip Britain of its ability to settle trades done in euros after Brexit goes through. London clears 70% of euro-based deals, according to Sky News, worth an estimated $570 billion (£460.9 billion, €511 billion) daily.
Kirby, the MP for Brighton Kemptown since 2010, told BI: “I’ve been very clear in the house that it’s an important thing, we don’t intend to lose it and I’m confident that we can retain it. But it will be part of the negotiations and we’ll have to wait and see how we progress. But we do well and it’s in Europe’s interests as much as the UK’s to make sure that that clearing doesn’t move to New York.”
Financial passporting refers to banks’ ability to sell products and services across the eurozone from locations in Britain using one licence. The government plans to pursue a “Hard Brexit”, breaking all contact from the eurozone. This has led to an acceptance in the finance community that Britain is willing to lose passporting rights.
However, Kirby signalled that the government will fight for access, saying: “We’ll want to maximise the access, not only for British companies to do business in Europe, but also so European companies can come here. There are many different ways that this can be delivered.
“There’s huge speculation, there’s a huge number of different adjectives used to describe Brexit. What the Prime Minister has been very clear about is we will pursue a bold and ambitious free trade agreement with the EU.”
He added: “What we want to see is no cliff edge and a smooth and orderly solution. I’m confident that we will get there. If you want me to speculate on specific detail, I’m not in a position to do that, only to say that ministers have met and listened to a large number of businesses over the last couple of months and we’re quite clear on access being top of the list [of businesses’ priorities].”
‘There is a spectrum of opinion’
Several investment banks have signalled will move thousands of jobs away from the UK as a result of the prime minister’s decision to pursue a clean break from the EU.
Kirby highlighted that while the loss of investment banking jobs would be difficult for the UK, financial services are broader than simply investment banking and other constituents have different priorities.
He said: “The thing to bare in mind about financial services is they are a broad spectrum. You’re challenger bank or building society might have a different opinion to some of the more established banks. Insurance companies might have a different opinion to fund managers. There is a spectrum of opinion. There are many people who see opportunities, other people quite rightly have important issues that need to be resolved.
“I think there is a general sentiment in the City that London will continue to be the global hub that it has been. All the things that make it an attractive place to do business will continue and the government’s in a good position to negotiate the best possible deal.”
Kirby, who was appointed City Minister in July 2016 as part of Theresa May’s first cabinet, was a businessman prior to entering politics. He helped set up Brighton radio station Surf 107 before setting up a chain of pubs and restaurants in the area.
By Ben Adams
2 February 2017
The executive team from AstraZeneca met this week with the U.K. government to discuss the country leaving the European Union, as its CEO says there are “opportunities” from the so-called Brexit vote as it appears “logical” for the European Medicines Agency (EMA) to leave its current London home after the U.K. pulls out of the union.
In its financials this morning, Pascal Soriot said that, of course, talks with Europe on what Brexit will be haven’t happened yet, so there is still a lot of uncertainty. “But it is logical to assume that the EMA will have to stay in Europe, and that the U.K. will have to have its own agency, but I think here this can work quite well actually, provided that several things happen,” he said on a call.
“One is that the U.K agency works proactively with the EMA […] and work to recognize each other’s approvals. The second would be that the U.K agency would be agile and focused on innovation, as well as new technology and products, and in doing so could actually support the introduction of new technology.”
This echoes the U.K.’s health secretary Jeremy Hunt, who a few weeks’ back told a health committee: “The EMA is an EU institution. I think it’s likely EU countries will want to move its headquarters outside the U.K.”
This comes a few months after fellow U.K. Big Pharma CEO, the out-going Sir Andrew Witty, warned of “tremendous disruption” if the EMA left town.
Sir Andrew was worried that moving the EMA and its 900 staff members from London to another European city post-Brexit will cause upheaval that affects the smooth running of the regulatory machinery.
On the impact of Brexit on his company and the industry, Soriot said: “As business people, once a decision has been made, whether you like it internally or not, you have to look for the opportunities and make the best of it.
“And I actually do think there are opportunities for the country, for the industry and for our company [on Brexit], and I think that the [U.K.] government is very committed to developing an industrial policy, and in particular one for life sciences.”
He said there have been in recent weeks statements on R&D as well as investment from the government in academic science that are all positives, and financial commitments in the manufacturing sector.
“This is important,” he says, “and I can tell you the industry, and us as a company, we have had very rich dialogue with the government as recently as this week. There is a very good and very strong, collaborative spirit, and from our point of view in the science and regulatory sense, I think we can do great things.”
General Brexit news:
By Tim Wallace
31 January 2017
The City’s top lobby group has performed a dramatic u-turn on Brexit, scrapping its previous campaign to remain in the EU and instead hailing the vote to leave as “unprecedented opportunity” for the UK to develop a powerful new set of trade and investment policies.
The group, which represents banks, finance firms and the professional services industry, now believes that Britain’s departure from the EU represents “a once-in-a-generation opportunity” for a strategic re-think of commercial relationships with the rest of the globe.
Before the EU referendum the organisation had planned for a way to cope with Brexit just in case voters chose to leave the group of 28 nations.
But the new proposals are more than just an effort to make the best out of Brexit – in an apparently major conversion, the group actively points out the ways in which EU membership has proved to be a “straitjacket” in terms of global trade, holding Britain back from building relationships with non-EU nations.
The group declared: “TheCityUK is a strong believer in the potential opportunities that the UK’s departure from the European Union will offer.”
It calls for a wholesale rethink of trade policy to focus on the services sectors which make up the bulk of the British economy, rather than the physical goods which are the focus of many trade negotiations.
“It reflects the fact that there was a vote to leave the EU and as a result there are a whole range of challenges and opportunities, said Gary Campkin, director of policy and strategy at TheCityUK.
“An area of opportunity in leaving the EU is the opportunity for first time in 40-plus years to have an independent trade and investment policy.”
This should include an intensive study of the value of trade in services and the makeup of global demand so that the government is fully informed, the group said, as well as a renewed focus on emerging markets which received less attention within the EU.
“In many ways global rules on services trade have lagged behind those on manufactured goods and agriculture,” Mr Campkin said.
He wants to see “a concerted effort led by UK and other like-minded countries to modernise, update and ensure the rules that govern services trade reflect the way services trade is done today. We will be absolutely freer to do it outside the EU.”
He noted that while the UK exports financial services to the EU very successfully, “over the next 10 to 15 years, 90pc of global economic growth is expected to be generated outside Europe and these markets – developed and emerging – must be a priority focus for the country post-Brexit.”
To truly go global TheCityUK wants the government to liberalise trade on a unilateral basis, as well as striking bilateral trade deals and regional agreements, in a frenzy of activity to build ties around the world.
“The Prime Minister has signalled her commitment to striking the best trade deals around the world post-Brexit,” said Mr Campkin.
“While existing key commercial links will be maintained, there are significant opportunities for trade and investment policy to be varied in innovative ways, breaking away from the legacy of past practice set by the EU.”
And while foreign direct investment into the UK has traditionally come from large, rich countries, “the rise of the BRICS, notably China and India as exporters of capital means that the UK will need to develop an investment regime that will take account of a wider spread of sources of inbound FDI,” TheCityUK said.
As part of this drive Britain will need to challenge the rise of protectionism in other countries, the document advises.
That includes plans in other countries to protect specific industries or attempt to force firms to employ staff domestically rather than trading internationally.
And Britain should also take disputes to the World Trade Organisation covering very modern forms of protectionism, the group said – for instance, challenging governments’ efforts to force companies to keep data stored in any particular country or jurisdiction.
The UK should work to take a leading role in global regulation, making the market in finance and other services more even and open, helping create more markets for British industries.
And Britain should make the case for more open borders globally, benefitting the UK as it will be able to access the best talent from around the world, and benefitting British citizens as they will have more opportunity to find the best jobs and to trade globally, the report argues.
By Sarah Gordon and George Parker
5 February 2017
Business is already suffering from Brexit, according to some of Britain’s biggest companies, lending weight to a cross-party effort by MPs this week to avert the risk of the UK crashing out of the EU without a deal.
Despite a stream of positive economic data, an Ipsos Mori survey of senior executives from more than 100 of the largest 500 companies found that 58 per cent felt last year’s referendum result was already having a negative effect on their business.
Just 11 per cent found the Brexit decision had meant a positive impact while nearly a third — 31 per cent — thought it had made no difference to their company.
“Business in this country is already feeling the pain of the economic upheaval of leaving the EU,” said Ben Page, chief executive of Ipsos Mori. “There is no sign that this is likely to ease this year.”
Company bosses have voiced concern about losing competitive advantage against European rivals if tariffs rise after Brexit, adding to the cost of producing and exporting goods.
Investors also appear to be waiting for greater clarity about the outcome of Brexit negotiations before committing funds to longer-term projects.
Theresa May will this week face a rebellion by pro-European Conservative MPs who fear that she could walk away from the negotiating table in Brussels without a deal, with potentially serious effects for business.
The prime minister has said she would prefer “no deal to a bad deal”, raising the prospect of Britain leaving the EU to fall back on World Trade Organization rules, including tariffs.
Steve Baker, a Tory Eurosceptic MP, said up to 27 Tory MPs could this week back a “wrecking amendment” in the committee stage of the bill authorising Mrs May to invoke Article 50 and trigger Brexit.
The amendment would give parliament a say if Mrs May concluded that no deal was possible, in effect requiring her to go back to Brussels to seek better terms. She will order Tory MPs to oppose the measure.
For Labour, the agony over Brexit continues, with Jeremy Corbyn facing the prospect of losing two of his closest allies — Diane Abbott and Clive Lewis — if they defy him and vote against the Article 50 bill on its third reading on Wednesday.
Mr Corbyn said he had yet to decide whether to impose a three-line whip requiring Labour MPs to back Brexit, but hinted he would show clemency to rebels in any event: “I am a very lenient person,” he told Radio 4’s The World this Weekend.
The Commons battles over Brexit have been played out against a benign economic backdrop, confounding those who predicted a downturn after a Leave vote.
The Office for National Statistics reported last month that the UK was the fastest growing economy in the G7 last year, and was not yet showing any signs of the slowdown that many economists predicted would follow the vote to leave the EU in June.
But the less rosy sentiment from business is supported by economic forecasters, with Sir Charlie Bean of the Office for Budget Responsibility and former deputy governor of the Bank of England saying last week that the strong consumer spending seen after the Brexit vote in June was likely to fall away in coming months.
BoE figures show that consumer borrowing growth in December slowed to its lowest in more than two years, while consumer confidence has also dipped.
Two-thirds of the 114 FTSE 500 business leaders surveyed believe the business environment will become more negative over the next 12 months, while only 13 per cent believed the opposite.
A large majority — 84 per cent — said it was “vital” to their business that the government handled Brexit negotiations well. Half said they were not confident in the government’s ability to negotiate the “best deal possible” with the EU for UK companies.
A large majority — 96 per cent — was confident their business could adapt to the consequences of leaving the EU, and more than two-thirds had already taken action in response to the referendum result. A tenth were moving business outside the UK.
In terms of their priorities for the forthcoming negotiations, the business leaders said movement of labour and access to skilled labour came the highest, followed by securing free trade or retaining the single market with the EU and passporting rights.
The interviewees said that to be successful in a post-Brexit UK, they wanted the level and complexity of regulation to be reduced and for it to still be easy to recruit EU staff.
By Harry Walker
5 February 2017
According to reports, Bank of America Merrill Lynch has hired property agents CBRE to seek out ideal sites in London as large as the 500,000 square feet in which its European base currently operates.
The possible move is likely to increase faith that London can remain the financial hub of Europe once the Brexit process is complete.
This comes in stark contrast to warnings from Remoaners and the Project Fear campaign of last year that claimed an exodus of financial services out of London to cities such as Paris or Frankfurt would happen to ensure the access of firms to the European single market.
Despite the fact contingency plans have been put in place by major firms to deal with the fall-our from Brexit, most businesses are waiting until Theresa May triggers Article 50 to see what kind of deal London will strike with Brussels.
Meanwhile, businesses are growing confident that Britain will remain an attractive base for companies spanning a variety of industries once it has left the EU, with a number of large companies announcing plans to expand operations in the capital.
Tech giant Apple last year announced it would set up shop at the Battersea Power Station development to build a new London headquarters big enough to house 3,000 staff.
Google is currently building a 10-storey, 650,000 sq ft complex in the capital.
And Facebook is planning to move to new offices in London’s Fitzrovia district, which is expected to create an extra 500 jobs for British workers in the UK.
The Sunday Telegraph reports BAML contacted CBRE to start an office search before last year’s EU referendum.
The decision to press on with the search is a huge vote of confidence for British business in the face of Brexit.
In a worst-case scenario, HSBC and UBS have said they could move 1,000 jobs out of the UK, and Barclays is considering bolstering its small presence in Dublin.
But BAML’s European boss Alex Wilmot-Sitwell said after last year’s historic vote he was “very confident” the bank could draw up a strategy to protect its business in Europe before Brexit comes into affect.
Express.co.uk has contacted BAML regarding these reports.
1 February 2017
MPs have voted by a majority of 384 to allow Prime Minister Theresa May to get Brexit negotiations under way.
They backed the government’s European Union Bill, supported by the Labour leadership, by 498 votes to 114.
But the SNP, Plaid Cymru and the Liberal Democrats opposed the bill, while 47 Labour MPs and Tory ex-chancellor Ken Clarke rebelled.
The bill now faces further scrutiny in the Commons and the House of Lords before it can become law.
The prime minister has set a deadline of 31 March for invoking Article 50 of the Lisbon Treaty, getting official talks with the EU started. The bill returns to the Commons next week.
MPs held two days of debate on the bill, which follows last June’s referendum in which voters opted by 51.9% to 48.1% in favour of Brexit.
Foreign Secretary Boris Johnson, a leading Leave campaigner, called the Commons result “absolutely momentous”. Speaking on Facebook, he added: “We may be leaving the EU treaties. We are not leaving Europe.”
The UK would “forge a new identity” and make “an amazingly positive contribution” to Europe, he said.
Labour leader Jeremy Corbyn had imposed a three-line whip – the strongest sanction at his disposal – on his MPs to back the bill.
Shadow cabinet members Rachael Maskell and Dawn Butler quit the party’s front bench shortly before the vote, in order to defy his orders.
Also, 13 Labour frontbenchers voted against their own party position, apparently without first resigning.
Mr Corbyn said: “Labour MPs voted more than three to one in favour of triggering Article 50. Now the battle of the week ahead is to shape Brexit negotiations to put jobs, living standards and accountability centre stage.
“Labour’s amendments are the real agenda. The challenge is for MPs of all parties to ensure the best deal for Britain, and that doesn’t mean giving Theresa May a free hand to turn Britain into a bargain-basement tax haven.”
One MP was heard to shout “Suicide” when the result of the vote was announced.
Liberal Democrat leader Tim Farron, seven of whose nine MPs voted against the government, said: “The Tories and Labour have failed future generations today by supporting a hard Brexit.
“Labour’s leadership tonight have waved the white flag. They are not an opposition; they are cheerleaders.”
MPs will discuss the bill in more detail next week when it reaches its committee stage in the Commons, during which amendments to the government’s plans will be discussed.
The SNP’s foreign affairs spokesman at Westminster, Alex Salmond, said: “Next week there will be detailed questions and the calibre of the government will be judged by how they respond to the amendments.”
Plaid Cymru’s Westminster group leader, Hywel Williams, called Labour’s stance “deeply disappointing”, adding: “This was not a vote on whether to accept the referendum result. It was a vote on whether to endorse the Tories’ extreme version of Brexit.”
Ken Clarke, the only Conservative MP to defy his party by voting against the bill, said the result was “historic”, but the “mood could change” when the “real action” of negotiations with the EU starts.
Earlier, the Commons voted against an SNP amendment aimed at scuppering the bill.
The bill was published last week, after the Supreme Court decided MPs and peers must have a say before Article 50 could be triggered.
It rejected the government’s argument that Mrs May had sufficient powers to trigger Brexit without consulting Parliament.
Talks with the EU are expected to last up to two years, with the UK predicted to leave the 28-member organisation in 2019.
By Jon Henley
2 February 2017
A day after parliament voted overwhelmingly to give Theresa May the power to trigger article 50, the government presented MPs with its formal policy paper setting out how the UK proposes to leave the EU.
Here are the key points of the Brexit white paper, which essentially builds and expands on May’s Lancaster House speech last month. It amounts to a list of objectives, many of which will not necessarily be easy to achieve.
Sovereignty, great repeal bill and control of UK laws
The paper says the British parliament has been sovereign throughout the UK’s EU membership, “but it has not always felt like that” – a striking comment.
It says the government will bring forward a separate white paper on the great repeal bill, which was first announced by May in her Conservative party conference speech last year to remove the European Communities Act of 1972 from the UK statute book and convert the body of existing EU law into domestic law.
The paper confirms that “wherever practical and appropriate” the same rules and laws will apply in the UK on the day after it leaves the EU as did before.
It also confirms that the government intends to “take control of our own laws”, which will mean “bringing to an end the jurisdiction of the European court of justice in the UK” and establishing a new mechanism for resolving future disputes between the UK and the EU.
The union and Ireland
The paper says the government will “work with the devolved administrations on an approach to returning powers from the EU that works for the whole of the UK and reflects the interests of Scotland, Northern Ireland and Wales” but does not go into specifics.
It also promises that no decisions currently taken by the devolved administrations will be taken away from them, and indeed that more decisions will be devolved (it does not say which). And it says it will pay particular attention to the Isle of Man, Channel Islands and Gibraltar, all of which have unique relationships with the EU.
On the island of Ireland and the common travel area with the UK, the paper notes the UK and Irish economies are “deeply integrated” and says the government will work to “develop and strengthen” those ties after Brexit.
It says it aims to retain “as seamless and frictionless a border as possible” between Northern Ireland and the Republic, and wants Irish and UK citizens to be able to continue to move freely north-south and east-west, “while protecting the integrity of the UK’s immigration system”. Again, it does not say how.
Immigration and reciprocal citizens’ rights
On the rights of EU nationals living in the UK and vice versa, the white paper goes no further than May’s speech.
It says securing their status is “one of this government’s early priorities for the forthcoming negotiations” and reiterates that “the UK remains ready to give people the certainty they want … at the earliest opportunity”. (The EU-27 have always seen this as part of article 50 negotiations).
It says it is consulting with expatriate groups abroad and EU businesses and other groups “to ensure we understand their priorities”, and “recognises the priority placed on easy access to healthcare by UK nationals living in the EU” – a key concern of many, particularly pensioners.
On controlling immigration, the paper offers no clarity. It says the government is “considering very carefully” the options open to it and working to “understand the impacts on the different sectors of the economy and the labour market”.
Businesses and communities will be able to contribute their views, it says, and suggests – for the first time with regard to immigration – that “there may be a phased process of implementation”, to give companies and individuals time to plan and prepare.
It says EU students can continue to come and study, in the short term at least, but says nothing about future access for EU workers. It also says workers’ rights under EU law will be preserved after Brexit.
EU trade, single market, customs union and budget
The white paper reiterates that the government aims to secure “the freest and most frictionless trade possible in goods and services” with the EU outside the single market and via “an ambitious and comprehensive free trade agreement”.
It also wants to be outside the customs union, so it can negotiate its own trade deals, but would like “a new customs agreement”, which should be theoretically possible thanks to new technology. Again, this does not go further than May’s speech.
We are told once more that the UK will not seek to adopt an existing model used by other countries, but try to “take in elements” of the single market in certain areas – in other words, bespoke deals for important business sectors. From the EU perspective, all this is ambitious: it sounds suspiciously like cherry-picking.
The paper plays up the financial services card, which the government plainly considers a strong one: the EU has a clear interest in “mutual cooperation arrangements”, it says, describing the City as Europe’s only global hub for money, trading and investment on which the EU will continue to rely.
It confirms the UK will leave the Euratom treaty, the legal framework for nuclear power, but says a new relationship will be negotiated, and it says the UK’s future status with EU agencies regulating areas such as medicines, aviation, food safety and financial services will also be part of discussions.
And there will be no more “vast contributions” to the EU budget, as May already said.
Trade with other countries; research
The paper repeats May’s pledge to make the UK a “champion of free trade” and says it will seek bilateral free trade agreements and participate in multilateral negotiations through the World Trade Organisation.
It acknowledges Britain “cannot agree new trade deals until after we have left the EU” – a possible bone of contention with the EU27 – but says there is “much we can do to prepare and to achieve now while respecting our obligations as members”.
It also says work is already under way on establishing Britain’s own schedules covering trade in goods and services at the WTO, aimed as far as possible at replicating those it currently has as an EU member.
The paper also says Britain aims to “continue to collaborate with EU partners” on a key part of its new industrial strategy: science, research and technology. Many academics expect this to become considerably more difficult after Brexit.
Security and crime cooperation
As May has already said, the UK will seek to continue working with the EU “to preserve UK and European security and to fight terrorism and uphold justice across Europe”, the paper says.
It says the government will aim to retain and develop existing cooperation in initiatives like Europol, the European arrest warrant, the Schengen information system, the new EU passenger name records, and the European criminal records information system.
In terms of security and defence, it also promises to “remain committed to European security and add value to EU foreign and security policy” – an offer that may well prove valuable in the exit negotiations.
The white paper says the government aims to deliver “a smooth, mutually beneficial exit” but says this will require “a coherent and coordinated approach on both sides”. Article 50 will be triggered no later than the end of March, it repeats.
It acknowledges it is “in no one’s interests for there to be a cliff-edge for business or a threat to stability”, saying the government would like “to have reached an agreement about our future partnership” by the end of the article 50 process and repeating May’s suggestion of variable “phased processes of implementation” to give everyone time to plan and prepare for the new arrangements.
The paper also reiterates the prime minister’s remarks that “no deal for the UK is better than a bad deal for the UK” – and suggests that, to mitigate against the impact of not getting the deal it wants from the EU, the government will prepare legislation “to ensure our economic and other functions van continue”.
It does not say what the legislation will contain, or what future economic model the government might envisage.
By Martin Arnold and Patrick Jenkins
29 January 2017
Goldman Sachs’ chief executive has emerged as a thorn in the side of UK prime minister Theresa May, warning that European financial centres could challenge London unless her government gives more priority to the City in Brexit negotiations.
The stance was evident when Mrs May met Wall Street bosses at the World Economic Forum in Davos 10 days ago to discuss her strategy for leaving the EU, according to several people briefed on the closed-door meeting.
Lloyd Blankfein, head of the US investment bank for more than a decade, asked Mrs May where financial services ranked in her top three priorities for Brexit, according to the people.
“Blankfein talked tough,” one of the people said. “He said there was no reason why European financial centres can’t set up as effective rivals.”
The Goldman boss mostly asked questions of Mrs May, and delivered them in a light-hearted way, the people said. Despite the cordial mood, some Wall Street bosses in the room detected a deeper concern about the UK’s position in Mr Blankfein’s comments. “There was a particular exchange between them,” said one person.
Goldman was one of the biggest donors to the Remain campaign in last June’s referendum and employs about 6,000 staff in the UK, its main European operation. Mr Blankfein has expressed bemusement to colleagues over how Mrs May appears to treat finance like any other industry, despite its major contribution to the UK economy and its exchequer.
Bankers looked on enviously in October when Mrs May gave Nissan a guarantee that its terms of trade would not be hurt by Brexit, winning a commitment from the Japanese carmaker to expand production at its plant in Sunderland.
Mrs May’s meeting with Wall Street executives came only hours after her address to the Davos elite, outlining plans for the UK to “step up to a new leadership role” in the global economy after Brexit and remain a “great global trading nation”.
Some foreign bank bosses were still reeling from an earlier speech by her in London, in which she confirmed for the first time that the UK would not be staying in the EU’s single market or customs union. City bankers fear this outcome could cut them off from EU clients.
A number of financiers spoke publicly at Davos about their plans to move thousands of jobs out of London as they prepared for a “hard Brexit”, including the heads of HSBC, UBS and JPMorgan Chase.
Mr Blankfein told Bloomberg TV that his bank was already “slowing down” its recent shift of resources to the UK because of the referendum decision. He said immigration had to be Mrs May’s “declared priority” but he believed “the financial services industry is so important to the British economy . . . so that will become an important priority”.
Also meeting Mrs May in Davos were Larry Fink of BlackRock, Stephen Schwarzman of Blackstone, James Gorman of Morgan Stanley, Brian Moynihan of Bank of America and Jamie Dimon of JPMorgan. All parties declined to comment.
Several of the executives came away from the event impressed by Mrs May’s grasp of the detail about how the City could be affected by Brexit. “She is on top of her brief,” said one person involved.
The prime minister also had a one-to-one meeting with Mr Schwarzman to discuss the best way to approach Donald Trump, ahead of her meeting with the new US president last Friday.
The Blackstone boss chairs Mr Trump’s new strategic and policy forum, which provides the president with advice from US business leaders.
3 February 2017
A fresh legal challenge to Brexit has been blocked by the High Court.
A group of campaigners who want Britain to stay in the EU single market argued that Parliament must approve the UK’s exit from the European Economic Area.
But the judges refused to give the green light for the challenge, saying the judicial review was “premature”.
The Supreme Court ruled last month that Parliament must have its say before the government can trigger Article 50 and begin official talks on leaving the EU.
Parliament is in the process of considering legislation which would give Theresa May the authority to notify the EU of the UK’s intention to leave by the end of March.
MPs overwhelmingly backed the bill on second reading on Wednesday.
The latest legal challenge was brought by supporters of a so-called “soft Brexit” – which would see the UK remain a member of the EU’s internal market.
They include Peter Wilding, chairman of the pro-Europe pressure group British Influence, and lobbyist Adrian Yalland.
The government claimed the case was unarguable since the existing EEA agreement would automatically cease to exist once the UK left the EU.
Under the terms of the EEA, which first came into legal force in 1994, the EU’s 28 members and three other signatories are bound to accept the free movement of people, services, goods and capital across their borders.
Dismissing the case, Lord Justice Lloyd Jones and Mr Justice Lewis said the government had not made a decision “as to the mechanism by which the EEA agreement would cease to apply within the UK”.
As a result, they said it was not clear at this stage what issues, if any, would fall within the jurisdiction of the courts.
In a joint statement, Mr Wilding and Mr Yalland suggested the government had “used procedure” to thwart them.
They said they would not rule out bringing further proceedings to give all those who would be directly affected by Brexit some form of legal certainty about their rights.
“It is intolerable that those who depend upon their EEA rights to trade with the EEA, or those who are married to EEA citizens, or are EEA citizens resident in the UK, are being used as a negotiating pawn by a government who can choose to act unilaterally to clarify our legal position, but will not,” they said.
“The government must stop playing poker with our rights and stop taking liberties with our freedoms.”
But a government spokesman welcomed Friday’s decision.
“As the prime minister has said, we will not be a member of the single market and we will be seeking a broad new partnership with the EU including a bold and ambitious free trade agreement,” he said.
Former UKIP leader Nigel Farage said the ruling was “good news”.
Select Milano Monitor 23/01/2017
20 January 2017
Summary from Italian:
- Select Milano is to begin its “roadshow” in London this March, meeting with the financial community to convince City operators to move to Milan.
- The movement of Select Milano to bring Euro clearing activities to Milan, in particular, has traction in the Italian Parliament, evidenced by the recently-passed bipartisan resolution (with the sole disapproval of the Five Star Movement) to help move forward the creation of a Financial District in Milan.
- Other fruitful steps already taken in the government include tax incentives and the new arbitration body within the CONSOB.
- Despite the purported top contenders for post-Brexit business to be Ireland, Germany and France, Milan will begin its “roadshow” in London this March to promote itself to financial operators within the City of London (six months later than the equivalent group from Germany, Frankfurt Main Finance). It is noted that perceptions of legal uncertainty and the Italian tax system may, however, discourage such a move.
- Select Milano is working to put the pieces in place to encourage investors to consider Milan. The government has shown its support through the recent resolutions in the Finance Committee which seek to help create the necessary conditions for a “financial citadel”. Motions taken include the approval of tax incentives for financial professionals and the creation of the arbitration body within the CONSOB.
- Article discussing the Finance Committee’s passage of the resolution which will seek to create the EEIG and support the establishment of a financial district in Milan.
- Co-signatories Alessandro Pagano and Gregorio Gitti noted the importance of demonstrating political firmness in encouraging the government to act on this matter.
- With the significant political commitment and will seen across the Parliament and other institutions, progress can be expected to be made by the government, specifically the Ministry of Economic Development.
- The resolution is further discussed at Affari Italiani and Corriere della Sera, but without mention of Select Milano’s role in the process.
- Select Milano, in its effort to bring the Euro clearing activities to Milan, has estimated that transferring these activities could help bring 10,000 new jobs to the city.
- At a recent meeting at Simmons and Simmons last week, Roberto Tasca (councillor in Milan) noted that Milan is particularly competitive due to its transport system, its real estate, its fibre network and its top schools and universities.
- The national government has also signed-on to this initiative, committing to work to establish a financial citadel in Milan. One particular area which the Finance Committee seeks to resolve is the Tobin Tax, the abolishment of which could help to win business for Milan.
- Bepi Pezzulli noted that if Euro clearing is moved to Frankfurt, this would only help to bolster the rhetoric of populists who believe the EU already centres solely on Germany.
- A similar piece features in Il Fatto Quotidiano.
- A discussion of Italian banking and public debt, concluding that the financial situation in the country would become easier should Milan become a more important financial centre.
- While Frankfurt and Paris are already working hard to garner post-Brexit business, Italy’s charge is being led by Select Milano which is working to create the necessary conditions in Italy to make it more competitive. The transfer of financial business to Milan would be good both for jobs and for GDP growth, as well as increasing the culture for investment in the real economy.
- Two goals that Milan soon hopes to achieve are the acquisition of Euro clearing activities and the European Medicines Agency. The pieces for this are beginning to align, with the recent creation of the arbitration body in the CONSOB and the recent EEIG resolution being passed in the Finance Committee.
- Select Milano is helping to bring this all together, encouraging the government to create the conditions necessary to make Milan more attractive. Bepi Pezzulli notes that clearing activities are strategic for the development of the banking markets as well as for systemic risk management.
- Luca Peyrano of Elite SPA notes that Milan Stock Exchange is already considered first in Europe for diversification and efficiency, and is a leader in the field of bonds and derivatives. It also has further safeguards than either London of Frankfurt.
- A broad political consensus is being built in Italy, with officials in Milan’s international relations department meeting with representatives from Goldman Sachs.
- Interview with Bepi Pezzulli, President and Founder of Select Milano.
- Mr Pezzulli notes that Select Milano is group working to create a new paradigm for commercial relations between Italy and the UK, involving Milan and the City of London, to create a Eurozone financial district in Milan.
- Select Milano’s role is similar to that of the London Olympic Committee or the Organising Committee for the Milan Expo — it is helping to acknowledge and create the conditions necessary to make its objectives a reality.
- The pre-existing links between the LSE Group and Milan gives more protection and security to Milan than other cities like Paris.
- Mr Pezzulli reiterates that Milan is not seeking to steal business from London — rather, it seeks to build a mutually-beneficial partnership which will help to develop each other’s banking systems and enable more effective risk management.
- Select Milano’s efforts to bring post-Brexit financial business to Milan are well underway, with it set to begin its “roadshow” with financial institutions in London this March.
- A bipartisan resolution recently passed in the Finance Committee to help create an EEIG within the city which will allow Italian companies to work alongside international ones. Committee Chair Maurizio Bernardo said that the proposal to secure Euro clearing activities in Milan should be supported across all Italian institutions. The attractiveness of the city gives it the necessary credentials to be the capital of European finance.
- The establishment of a financial centre in Milan will be a great opportunity for economic growth and to re-boost Italy’s economy.
Italy’s institutions need to work together in order to secure this.
- Banks like HSBC and UBS already announced their decision to move jobs away from London.
- Maurizio Bernardo, Finance Committee chair, is the primary signatory of the EEIG resolution which passed the Committee on 17 January. He is interviewed for this piece.
- Bernardo affirms that the government supports the creation of a financial district in Milan. Milan is able to attract investors from many foreign countries, and is looking to bring the European Medicines Agency to the city as well.
- Bernardo states that this will be an opportunity to re-think the Tobin Tax as well.
- From March, Select Milano will begin its London roadshow. According to Bernardo, this will be an opportunity for all Italian institutions to work together to make this successful.
- Eyewear group Luxottica-Essilor has recently shown a loss of appeal in the Milan Stock Exchange. Bernardo says that this will be an opportunity to renew confidence in it and give momentum to Milan’s economy and finances.
- Even if the British Parliament rejects Brexit, Bernardo thinks Italy will still be very attractive to investors.
- One of the less-discussed topics within
Brexit talks is the future exclusion of British universities from European exchange and research programmes.
- In 2014 when Switzerland rejected the agreement on freedom of movement with the EU, Swiss students around Europe received a letter to inform them about the cancellation of their programme.
- Further, Brexit is not just about the ERASMUS programme, but about partnerships and research done with European funds that will be easier to do with the USA and Canada as of now.
- UK universities will have to establish partnerships with Eu
ropean universities to access EU funds.
- Among European universities, Germany is not a good choice due to the low rankings of its universities. Spain is attractive for its connections with South America, but it has a high unemployment rate, and the most-industrial region (Catalonia) has banned Spanish-language teaching for Catalan.
- France has good quality universities, but they are suited more to train and educate local students.
- Italy has great potential: Italian is the 3rd most-studied language around the world after English and Spanish, and many of its universities have high international rankings.
- Considering that Milan might be able to attract Euro clearing and the European Medicines Agency, its innovative populace would be able to tailor university courses for these activities.
- Select Milano estimates that Euro clearing could help to bring at least 10,000 new jobs to Milan and help to boost the country’s GDP by 30 billion, with another 6 billion in additional tax revenues.
- Milan is competing against Paris to attract the Euro clearing market, but Paris is not considered that attractive to foreign investors anymore due to issues of security. From a financial and tax point of view, it does not offer any significant advantage over Milan.
- Other competitors Dublin and Luxembourg are too small to host such a market.
- Milan is not just interested in the clearing market, but would also like to pick up business from those operators leaving London as a result of the loss of EU passporting rights.
- Milan Mayor Giuseppe Sala, who is already working to have the European Medicines Agency transferred to Milan, is supporting the initiative as well.
- Major of Milan Giuseppe Sala has confirmed his support for the creation of a financial district in Milan.
- A decree for the creation of the EEIG will soon be issued from the Council of Ministers. Bepi Pezzulli believes that Milan can truly become a successful financial district, and that the EEIG is the best way to go about realising this.
- Within the EEIG, Milan could work with institutions like the City of London Corporation or the IFSC in Dublin.
- Tobin Tax remains a potential obstacle to Milan’s competitiveness, but Select Milano has proposed that this should be abolished.
- Arbitration is proposed as a way to avoid the traditional slowness of the Italian judicial system; it will help facilitate the dialogue between relevant parties and will cost less than traditional proceedings. This will make the system more aligned to that of English Common Law.
- [Full text unavailable, the below is a summary of the available text.]
- Measures have been put in place in Italy to help attract people from the finance community, including significant tax incentives.
- Bepi Pezzulli of Select Milano stated that Milano is the ideal home for the Euro clearing market considering that the clearing house LCH Clearnet controls both the LSE and the Milan Stock Exchange. This results in a convergence in interests between the City and Milan, and could help to bring 10,000 new jobs.
- The Euro clearing market requires an ecosystem comprising four elements: entrepreneurs, financiers, university research and service providers. With Milan hosting the second-largest industrial base in Europe, as well as elite universities and a significant transport network, it is ideal.
- Mr Pezzulli further notes that a relocation of the Euro clearing market would threaten the supremacy of London, and Paris has significant fiscal pressures and a greater terrorism risk than Milan.
- The proposed EEIG structure would help Italian and international companies to work together seamlessly. Mr Pezzulli notes that if Italy can work together, Milan can be the answer to the Brexit problem.
Milan and Brexit:
By Kai Kupferschmidt
20 January 2017
Europe and Brexit:
By Ben Chapman
19 January 2017
Senior bankers at Goldman Sachs and Bank of America as well as Swiss lender UBS lunched with Mr Sapin at the Hotel Sofitel in Washington DC during an official trip for the G20 meetings in October, according to people at the event. Walter Gubert, vice-chairman of JPMorgan, also attended.
The city is fighting to attract the same business against others, however, such as Frankfurt, Luxembourg and Dublin. Frankfurt, home to the eurozone’s banking regulator and a sizeable financial sector, is considering changing its labour laws to make it more attractive for banks.
The European Central Bank has stepped up its warning that it will be difficult for the UK to hang on to its valuable euro-clearing business after Brexit, calling for EU institutions to seek more, not less, oversight of the trade in London once Britain leaves the bloc.
General Brexit news:
By Anushka Asthana, Heather Stewart and Jessica Elgot
18 January 2017
Theresa May warned European leaders that the UK is prepared to crash out of the EU if she cannot negotiate a reasonable exit deal in a speech where her tough talking rhetoric prompted key figures in Brussels to say that the country was on track for a “hard Brexit”.
- Take back control of borders, arguing that record levels of migration had “put pressure on public services”
- No longer be under the jurisdiction of the European court of justice, because “we will not have truly left the European Union if we are not in control of our own laws”
- “Explicitly rule out membership of the EU’s single market” because that is incompatible with migration controls
- Not stay in the customs union, but try to strike a separate deal as an “associate member” to make trading as “frictionless as possible”
- Not be required to “contribute huge sums to the EU budget” but simply pay towards specific programmes
- But would seek a “new, comprehensive, bold and ambitious free trade agreement” with the EU, and build trading relationships with countries beyond Europe as part of a “global Britain” strategy
Select Milano Monitor 15/01/2017
- This article discusses the resolution currently in the Finance Committee which will seek to help bring the Euro clearing market to Milan. The market handles €570bn per day, and counts 11k in staff numbers and as such would be highly significant for Milan to capture.
- Deputy Gregorio Gitti says that there’s a limited time frame to make this happen in Milan. Gitti, along with other Deputies Maurizio Bernardo and Alessandro Pagano, is leading the drive for the Euro clearing resolution in the parliamentary Finance Committee. They expect it to pass sometime this week.
- Select Milano’s role in this is mentioned, with Bepi Pezzulli noting that they do not fear the competition of Frankfurt and Paris as Italy is taking such positive steps in the right direction to make this happen. He also notes that Milan can act as an answer to the populists who claim Europe is just centred on Germany.
- It is noted that the government has already secured the brain redux and tax incentive resolutions, so its commitment is clear. The new arbitration department within the CONSOB is another great step. After the EEIG resolution, the final piece to the puzzle will be the creation of the Milan Financial District itself which will be taken up by the Economic Development Ministry.
- In terms of infrastructure, Milan already has its own chamber for clearing activities that works with €10bn in transactions daily. Other infrastructural investments underway include a more direct route to the airport.
- Brexit went from being a risk to a problem to an opportunity. Various European cities are vying to become London’s successors in a post-Brexit world including Frankfurt, Paris, Dublin, Luxembourg and even Stockholm.
- In Milan, the movement to snag the European Medicines Agency is already underway. In addition, many (including Select Milano) are campaigning for the Euro clearing market to be transferred there, bringing long-term economic growth and industrial development, among other benefits.
- The European Market Infrastructure Regulation (Emir Directive) needs quick answers to questions of risk — Milan’s solution is the creation of the Financial District which will help realise the Industry 4.0 plan.
- In a positive development, the issue of the historic slowness of the Italian justice system is solved with the new CONSOB arbitration body.
- This article discusses Milan’s movement to create a financial district and establish a bridge between London and the Eurozone post-Brexit, competing against other cities like Frankfurt, Paris, Luxembourg and Dublin to gain business.
- Finance Committee Chair Maurizio Bernardo is quoted as saying that key financial operators and intermediaries risk losing their EU passporting rights and should move within the Union.
- Select Milano’s work in particular is noted, with a quote from Bepi Pezzulli on some of the incentives and measures proposed like the brain redux law and the EEIG formation.
- Deputy Gregorio Gitti is also quoted, discussing the importance of the role of arbitration to the EEIG. He also states that the government can work to make Milan even more competitive through tax incentives which will drive international business figures to Milan.
- The power to make this happen is now in the hands of government which will vote early this year on the Finance Committee’s resolutions regarding the Milan Financial District.
- The article finishes with Bepi Pezzulli suggesting more effective city marketing by Milan in four branches – Visit Milan, Study in Milan, Work in Milan and Invest in Milan.
- This article also features on Edilportale.
- A summary of the cities vying for post-Brexit business in the asset management industry, mentioning in particular Dublin, Luxembourg, Paris and Frankfurt, with Berlin, Amsterdam and Milan listed as secondary contenders (due to tax advantages and existing infrastructure in the primary contenders). It is noted that banks with operations in London are primarily concerned about the loss of passporting rights and divergences in regulation.
- Milan’s “soft” approach stands out as its strategy involves twinning Milan with the City and creating a financial citadel which replicates the fiscal, administrative and legal ecosystem of London.
- Analysis of the purported top contenders for gaining post-Brexit financial business — Frankfurt and Paris. Frankfurt is noted as besting Paris in macroeconomic health, suitability as a financial centre, proximity of regulators, taxation and labour laws, salaries, cost of living and knowledge of English.
- Paris bests Frankfurt in city marketing effectiveness, number of banks, efficiency of regulators, infrastructure, lifestyle and FinTech.
- Bepi Pezzulli is quoted in the section which discusses the differences in taxation and labour laws between Frankfurt and Paris: “Paris has got a very high tax rate and its labour legislation is a nightmare.” This quote was taken from last week’s Financial News piece.
- In Milan’s movement to attract the European Medicines Agency post-Brexit, its candidacy may now be at risk as the agency may move sooner than expected, with its budget hinting at a transfer within the next year.
- As Milan’s Expo area, which the city had previously offered as the headquarters for the Agency, would not yet be ready for use by the time of transfer, the former Falck headquarters in Sesto San Giovanni has been offered up instead. However, even this will not be ready before end-2017. A temporary headquarters is being sought out to house the EMA’s 600 workers in case Milan is chosen.
- AdnKronos reports that Milan Mayor Giuseppe Sala and Lombardy Region President Roberto Maroni have written a letter to Prime Minister Paolo Gentiloni to urge him to take political action to secure the EMA in Milan.
There is confusion over the fate of the UK service economy after Brexit, particularly where the City of London is concerned. Misunderstandings threaten a proper discussion and, worse still, run the risk of wasting diplomatic capital in the Brexit negotiations.
Select Milano Monitor 08/01/2017
By Lucy McNulty
6 January 2017