EU cities looking to prise business away from London post-Brexit

Cities around the European Union are getting ready to prise business away from London following the country's vote to leave the bloc. At the heart of it all is London's lucrative financial services sector which could be denied a European banking passport; a framework that allows banks based in one common market hub to conduct activities and transactions around the EU.

With a big Brexit-shaped gap appearing in London, other cities are more than willing to step into the breach. For starters, Spanish cities are jousting with each other to tempt London-based firms to their financial centres.

Madrid and Barcelona are both looking at options such as tax breaks to attract banks and international firms who are considering moving away from the UK. However, the leading pack of business suitors comprises of Amsterdam, Dublin, Paris and Frankfurt.

Amsterdam

Amsterdam has doubled the number of staff who work on potential firms relocating from London. Dutch Prime Minister Mark Rutte said in July that the strict 20% cap imposed last year on bonuses in the financial sector has "some flexibility" for foreigners.

The city has already tempted such groups as US computing firm Salesforce, Australian telecoms business Telstra and American media company Netflix to site major bases there over the last two years. (Click here for our special report)

Dublin

The fact that Dublin and London share the same language, time zone and common law are obvious advantages for financial firms looking to relocate away from Britain's capital.

Ireland's 12.5% corporate tax rate has also proved very appealing with international firms. However, while the advantages might be obvious, Dublin also shares some very familiar problems with London, such as a chronic housing shortage and a transport system that requires improvements. (Click here for our special report).

Paris

Within hours of the UK's Brexit vote Paris was running ads in the Financial Times online saying "Welcome to the Paris Region".

The French government is considering incentives such an income tax break of up to 50% and the right to exclude foreign properties and assets from the calculation of French wealth taxes for eight years for staff and firms willing to relocate from London to Paris. (Click here for our special report).

Frankfurt

Finally, Frankfurt – Germany's finance hub, and home of the European Central Bank and Deutsche Boerse – talked up its own prospects via a much more subtle pitch. Frankfurt Main Finance, the city's lobby group believes attracting businesses and banks to its patch does not necessarily involve getting into a fist-fight with London.

It is looking to complement rather than supplant London as a financial capital and share in the spoils. Furthermore, Frankfurt is one of those few European cities where businesses, policymakers and even the stock exchange itself embrace English as the language of commerce, something that Frankfurt Main Finance believes would be very appealing to US investment banks that it hopes to attract, along with Swiss and German banks with a large London workforce. (Click here for our special report)

However, none of the suitors are going to find it easy when it comes to attracting financial services sector players.

London tops the latest Global Financial Centres Index (GFCI), which ranks competitiveness within the sector. It is followed by New York and Singapore and its nearest European rival – Zurich – comes in sixth place.

The Swiss financial hub is not in the EU either. It too is involved in Switzerland's wrangles with the EU, after the country voted to end its freedom of labour agreement under European Economic Area auspices with the bloc earlier this year.

By contrast, Frankfurt is ranked 18th, and Dublin, Paris and Amsterdam languish in 29th, 32nd and 34th places respectively on the GFCI.