Echoing the paradox that’s seen the French economy grow at a decent clip despite recession-level gloom among consumers, the assembled bankers were more fixated on Paris’s upbeat post-Brexit financial renaissance than Emmanuel Macron’s political woes or Marine Le Pen’s rising popularity. They praised France’s talent pool from elite engineering schools — no longer freely accessible from London — and government support for research and development that’s helped the country top foreign-investment surveys and recently woo a Taiwan gigafactory project worth as much as €5.2 billion ($5.7 billion). “There’s momentum in Paris,” one banker told me.
As counter-intuitive as it might seem given stretched debt levels, social unrest and rising interest rates, the mood suggests yet more European expansion ahead for US banks that are watching economic resilience rather than just the whip-cracking of regulators. Bank of America Corp.’s Vanessa Holtz told a separate Bloomberg event earlier in the week that her firm plans to keep increasing its presence in Paris even after staff numbers rose more than eightfold in four years. The “regime shift” of faster inflation and a higher cost-of-living across many Western cities means regular strikes are no longer seen as a uniquely French thing — as any recent visitor to the UK will attest.
This will all be music to Macron, even though nowadays he prefers to publicly focus on the popular idea of “reindustrializing” France rather than boosting finance or tech startups.
But at the same time, there’s a glass-half-empty, glass-half-full vibe to proceedings: While Paris has been among the big beneficiaries of the estimated 7,000 or so jobs leaving London for the European Union, and has started to pull in more fund managers as well as investment bankers and traders, there’s been no sign yet of a clear toppling of London’s crown as Europe’s financial capitol. The euro zone financial system remains more fragmented than before the 2008 financial crisis, and no hub can yet match the UK capital’s 200,000 finance jobs. Top decision-makers and fund managers have stayed put; some finance firms have grown in London, too.
Perhaps those who see the glass as half-full might be right to assume Parisian “momentum” will win the day. There are more high-earning bankers in France than there used to be — a sign that moving to the French capital is no longer a career-killer, rather a place one might actually want to live in with London-style amenities and a social safety net in case your employer starts cutting jobs. “Frankfurt is a village, Milan is a fad, Paris is the new London,” as one pithy view on the efinancialcareers website recently put it.
But a lot will depend on how tightly regulators turn the thumbscrew on global banks to ensure their continental outposts don’t amount to “empty-shell” hubs that are too dependent on London. The EU is still clearly hooked on London-based trading infrastructure, such as clearing, which continental policymakers have been reluctant to drag onshore too hastily if it means saddling home firms and regulators with extra costs.
Ultimately, the best way for Paris to keep attracting jobs, investment and talent will be to work with other cities from Dublin to Amsterdam on integrating Europe’s 27 disparate markets and 450 million consumers into a more unified whole. So far, the EU has done a pretty poor job of knocking down national silos, with a still-incomplete banking union and a still-fragmented capital market. With trillions of euros in potential financing on the line, and a long list of investments to fund from renewable energy to healthcare, there’s more opportunity in uniting 27 hubs than in trying to pick one to rival the City. Plus ca change, you might say.
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• BNP and Its European Bank Peers Aren’t Stressed: Paul J. Davies
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Lionel Laurent is a Bloomberg Opinion columnist covering digital currencies, the European Union and France. Previously, he was a reporter for Reuters and Forbes.
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