No Need for a Transitional Brexit Deal, France’s Mestrallet Says
(Bloomberg) -- The terms of any Brexit deal must be decided on quickly to avoid relying on interim or transitional agreements, said the head of a group promoting Paris as a financial center.
“Things have to be clear as soon as possible,” Gerard Mestrallet, the chairman of Paris Europlace, said in an interview with Bloomberg Television on Tuesday. “Business has nothing to gain from a long transitional period, which will be a period of uncertainties.”
The European Union and the U.K. are preparing for Britain’s exit from the bloc. Chancellor of the Exchequer Philip Hammond told Parliament’s Treasury Committee on Monday that support is emerging “on both sides of the English Channel” for a longer, transitional period to allow Britain set out terms for its new relationship with the EU. Prime Minister Theresa May has pledged to begin the Brexit process by the end of March, starting a two-year countdown for a U.K.-EU deal, unless both sides agree on an extension.
For Mestrallet, while London will remain “a very large, international financial center,” “momentum” is building for Paris to attract more financial jobs and money flows as Brexit talks start and France prepares for presidential elections in mid-2017.
“The elimination of the financial passport” should be part of the Brexit, pushing non-EU financial firms including U.S. and Chinese banks to move some operations elsewhere in the EU, Mestrallet said.
“If they want to have access to the continental market, they have to cross the Channel and come somewhere, Paris we hope or also Frankfurt or Luxembourg,” said Mestrallet, who’s also the chairman of energy company Engie SA.
In France, whoever is elected as president should rapidly adopt a package to raise the country’s attractiveness for business and investment, he said. He called for “a strong improvement” to build on outgoing President Francois Hollande’s “positive” measures such as a special tax regime for foreigners.
Paris Europlace, representing both French financial firms and their large corporate clients, is setting out a series of proposals for candidates in next year’s presidential vote, including a stable and predictable tax regime, more flexible labor laws and expanding the use of pension funds to better link retirement savings and corporate-funding needs.
There is a “sacred union” in France between politicians on both sides to make Paris’s financial center more attractive, Mestrallet said. France’s corporate tax level stands at 33 percent, on par with Germany, and it will decline, possibly to as low as 25 percent, he said. Mestrallet declined to comment on candidates and their specific programs.
The group’s proposals are coming a week after Manuel Valls resigned as prime minister to run in the Socialists’ January primaries. The French government this year committed to corporate taxes falling to 28 percent in 2020, turning more pro-business after Hollande campaigned four years ago on an anti-finance message. Former Economy Minister Emmanuel Macron is also running, but as an independent.
Francois Fillon in November won the nomination for the opposition party, Les Republicains, on a platform for harsh economic change. He has become the front-runner for the April-May two-round presidential vote along with the anti-European, anti-establishment Marine Le Pen.