Luxembourg chases 3,000 jobs from post-Brexit London

Luxembourg hopes to poach around 3,000 jobs from London following Brexit, a senior financial official at the Grand Duchy told AFP this week.

Nicolas Mackel, head of financial development agency Luxembourg for Finance, indicated that the country hoped to glean the valuable jobs following Britain’s scheduled EU departure in March 2019.

“In the short term, which I am seeing as two years, I think that it will be around 3,000 jobs in Luxembourg,” Mackel told AFP in an interview in central London.

Since Britain voted to leave the European Union in June 2016, a fierce rivalry has erupted between Paris, Frankfurt, Amsterdam, Dublin and Luxembourg for the jewels of London’s treasured City finance district.

Europe’s other dominant financial hubs are eager to seduce banks and insurers who are looking to set up headquarters in the EU after Brexit.

“These institutions are trying to set up an entity allowing them to be operational after Brexit, from day one,” Mackel added.

“Everybody is trying to take their decisions before the end of the year. The decision involves initiating a regulatory procedure which takes at least 12 months.”

– Passporting at risk –

Passporting rights — which allow large international banks to be based in Britain whilst trading freely with other European Union countries — are at risk from British Prime Minister Theresa May’s plans to exit the single market.

“As we have no idea what Brexit will look like, nor do we know what Britain’s future relationship with the European Union will be, or its degree of access to the single market, we do not know the scope” of these institutions’ European ambitions, Mackel told AFP.

“It will really depend on the result of the negotiations” with Brussels, he added.

This is why he refrained from predicting a mass exodus of financial staff from London to the continent, especially as Brexit talks are still in early stages and are likely to be difficult.

May insists that Britain will leave Europe’s single market, or tariff-free zone in order to control EU immigration, thus delivering a “hard” Brexit, but the outcome remains unclear.

“What we have seen in the past fifteen months is that there is no exodus from London. There is no relocation from a particular bank to elsewhere on the continent, but rather there are thoughts about the very targeted relocalisation of certain activities,” Mackel said.

– Financial stronghold –

Mackel argued that every city must rely on its own strengths, given that large banks are made up of multiple sectors of activity, each with their own internal rationale.

“It is (a) mistake to think that banks are monoliths. There are different jobs within a bank and each job takes different decision(s).”

Luxembourg is determined to make the most of Brexit by using its economic and political stability, its multilingual population and its international schools as a draw, he insisted.

Neither space nor aesthetics are an issue for the capital city, which only occupies two percent of the Grand Duchy’s total territory.

“During the Napoleonic era when we were integrated into the French empire it was as a department of forests. So it is pretty green,” Mackel quipped.

The Grand Duchy wants to tap into its knowhow as a financial stronghold of 60,000 jobs, many in asset management.

Mackel anticipates fund managers will want to move their more risky activities such as hedge funds away from their traditional locations in London.

Luxembourg has managed to attract not only asset managers but also eight insurers, including big American and British names such as AIG and RSA.

The country also hopes to lure the European Banking Authority, the EU banking regulator that is currently based in London.

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