Bon chance! Macron aims to hollow out The City (of London)

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According to the French Consulate in London, there are around 400,000 French nationals living in Great Britain. ONS reports that there are 157,000 Brits living in France. A fair assessment would be because the working opportunities in the UK are more abundant than those in France. Indeed London is the 6th largest French city. Bigger than Nantes, Bordeaux or Strasbourg. London has always been the financial hub of Europe and Macron is promising to shift that to Paris. There are plenty of reasons why that won’t happen.

First, the latest survey on financial sector relevance puts London at #1. Financial sector relevance really revolves around one crucial thing – liquidity and sensible regulation that isn’t overly onerous.

President-elect Macron is discussing the idea of stealing up to 20,000 brains from London into Paris. The surest fire way to ensure that won’t happen is that the UK can easily nip this in the bud. If the EU looks to slap certain financial restrictions on banks that don’t comply then they’ll happily conduct business in places where they can. Macron should know that ‘liquidity attracts liquidity’. Put in roadblocks that inhibit it and capital will seek freer climes to operate in. UK can cover that put option simply and easily. Nothing tickles a banker’s appetite more than the ability to operate in a less restrictive environment. There is no reason a multinational company listed in Frankfurt would try to raise capital in Europe if the UK was half the cost. Goldman Sachs employs some of the best legal brains to get around any problem.

Money is more global than ever. Singapore is a good example of that. More and more robots are trading currencies, equities and commodities. ETFs abound. The financial services industry is shrinking in absolute number of employed. By way of example the number of registered securities professionals in Japan has more than halved in a decade.  So Macron can make all the half-baked knee jerk promises he likes but social media has a way of making everyone remember when it suits least.

I’m betting on Britain. National currency, national central bank and soon to be fully flexible policy setting. Speaking of currencies. Did you know that none of the bridges depicted on euro notes actually exist? They decided against on the basis that certain nations might get rubbed the wrong way if say Germany was on the 500 euro note and Rome was on the 5 euro note…that ought to tell us something.

Bon chance mon ami!

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