"If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace. We ask not your counsels or your arms. Crouch down and lick the hands which feed you. May your chains set lightly upon you, and may posterity forget that you were our countrymen."

Friday, 24 July 2009

Friday Post

The fight between Frankfurt and Paris to become the controlling financial centre of Europe has been going on for almost twenty years to my knowledge, and I'm definitely not an economist or 'in-the-know'. The current economic crisis has provided the perfect backdrop for London to have its teeth drawn and for France & Germany to step up the pressure.

Here's an extract from an article by Open Europe (link below)
If anyone is in any doubt about the motivation behind the recent, very controversial, tranche of EU proposals for financial regulation, they should take a look at the FT today. There can be no doubt that this is first and foremost about raising rivals' costs.

According to the paper:

Nicolas Sarkozy is planning a massive expansion of the business district on the north-western edge of Paris to challenge the City of London as Europe's pre-eminent financial centre. In spite of his tirades against financial capitalism, Mr Sarkozy wants a bigger slice of the business.

The blueprint for La Défense - which includes several spectacular skyscrapers and, eventually, a further 1m sq m of office space to the west of the arch - lies at the heart of Mr Sarkozy's plans for le Grand Paris : a vast programme of infrastructure improvements and governance reforms that he hopes will turn Paris into Europe's economic powerhouse.

The French government is intent on taking advantage of the City's woes and its battered reputation to turn Paris into a competitive financial centre. 'It is clear today that the City is in great difficulty and that is an opportunity for France to reinforce its financial attractiveness," Patrick Devedjian, the minister in charge of La Défense expansion, said last month. His ambition was to turn La Défense into a "great financial centre, rival to the City of London.

It continues:

French politicians and financiers have long supported regulatory harmonisation inside the European Union as a way of levelling the playing field with London. With the crisis sweeping aside political resistance, especially in the UK, they are closer than ever to getting their way.

French bankers are counting on EU rules on bank capital requirements to end what they see as the advantages afforded to British banks under existing UK definitions. France is also clamouring for an EU clampdown on hedge funds, which many in the industry in London regard as a protectionist onslaught against funds based offshore or in the US.

We just hope the Treasury have read their pink pages today.

More at Open Europe

There's another interesting article here: Euro-Med and if you want to know what I've been saying (well, you never know) try clicking on 'Frankfurt' for some relevant links.

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