Post Brexit: Can France become the new financial centre?

While the post-Brexit consequences were soon felt in the United Kingdom, this British exit from the European Union could well be a great financial opportunity for France. By leaving the euro, London’s power could indeed weaken. Could Paris then become the new financial centre of reference? We dream about it!

A great power “poured” by emotions?

London, also known as the City, was until then considered to be the most beautiful financial centre in the world. And, moreover, Frankfurt and Paris could not compete with it, even though the United Kingdom had already had to face countless economic difficulties in the past. The main European financial exchanges were, in fact, mainly in London. And yet, on their own, the English have turned everything upside down. In any case, this is what many financial players think. The fact is that in the financial field, there is no room for “emotions”.

city london

Warren Buffet himself has already confirmed in his writings that the worst enemy of a financier is emotions. Brexit would, however, be the result of a “collective emotion”, absolutely determined to defy the vacuity of European organisations. Emotions that then took over from British pragmatism, which nevertheless allowed him to carry out objective analyses and reach the top in the financial field. Of course, the consequences of such a change will not be minimal. For France, on the other hand, it is an opportunity to take the reins.

Coverage difficulties in Europe

Among the main changes brought about by the Brexit is the loss of the “European passport”. This is the famous economic passport that allows members of the European Union to operate throughout the country, in compliance – of course – with the regulations in force. Especially on French territory, holding the “passeport in” allows a company from an EU Member State to offer its services in France; while the “passeport out” allows a French management company to operate in another Member State or in an EEA (European Economic Area) country.

Thus, by now being outside the EU, British financial and economic actors no longer have this passport and are no longer as free as before to operate in the territory. However, British institutions are heavyweights on the European market, but this could well change if there is no coverage. If previously, this passport served as an opening to other European countries, it is now necessary for them to negotiate on a country-by-country basis. And they would, of course, have to comply with each country’s own trade regulations. Which is still a long way from being won…

What if Paris took over in a post-break situation?

la Défense Paris

But if Brexit closes many doors to the British, for France, we can say with certainty that there are really new opportunities that should be taken advantage of without delay. Several points make the Paris financial centre much more advantageous for investors. And, moreover, regarding the management of SME/VSE credit funds, this role will now have to be shared. Although they are the largest, English management companies will no longer be able to distribute funds in their entirety due to the lack of a European passport. The French players will then inevitably come into play and, if they know how to exploit this opening, the Paris financial centre could well be THE new global financial centre. Of course, these are again only hypotheses. Several factors may still come into play. To be continued..

  • Discover eToro, the forex broker specializing in social trading who posted great results for his traders during Brexit.