Frankfurt pushes for UK single market access in financial services

Frankfurt city skyline

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Frankfurt is among the European cities that could gain finance business from London post-Brexit

Frankfurt officials said that while UK cannot be given unconditional access to the single market, it will benefit Frankfurt to see London maintain its status as global heavyweight located in the region.

Hubertus Väth, managing director of Frankfurt Main Finance, the group promoting Frankfurt, said: “We think the UK should be offered the utmost access to the single market, depending on what trade model the UK government decides upon.”

He said that rather than trying to supplant London as a global economic hub post-Brexit, nearby Frankfurt is better-positioned for a supporting role.

“Frankfurt has decided to be the bridge to the financial centre of London,” said Väth.

Top officials from Germany’s central bank met with local politicians and financial sector lobbyists in Frankfurt on July 11 to discuss a campaign to lure some financial jobs away from the UK capital. Frankfurt officials said after the meeting that they will visit London in mid-August to promote Frankfurt as an alternative location for firms worried about Brexit, but Väth said that Frankfurt would likely only attract a very small slice of the more than 700,000 financial services jobs in London.

“We believe London will remain the foremost financial centre in Europe. It is not our strategy to weaken London,” Väth said.

The UK’s vote to quit the EU has raised concerns about whether banks there will retain access to the single market. Whether the UK gets a deal that allows it to sell financial products across the EU – so-called passporting – is likely to be a key factor in banks’ decisions on whether they stay in London or relocate to other EU cities such as Dublin, Paris or Frankfurt.

The French government has insisted UK financial services would lose single-market access if the British government refuses to play by the rules of the EU. Frankfurt will press policy makers in Berlin and Brussels to grant the UK the maximum access possible, conditional on what trade agreement London reaches.

“We clearly disagree with any sort of punishment,” Väth said.

Frankfurt’s open position on Brexit echoes that of Deutsche Börse, which remains committed to its planned $ 30 billion merger with London Stock Exchange Group despite the UK’s vote to leave the EU.

Hessian Economic Minister Tarek Al-Wazir of the Green Party said on July 11 that he was worried about the uncertainty enveloping the UK economy. Al-Wazir said that while Brexit held opportunities for Frankfurt, the city has a strong interest in UK stability.

“Where do all these people who come to stay in hotels in Hesse come from? There’s a lot of media coverage about the Chinese but there’s still more visitors from the United Kingdom,” Al-Wazir said, speaking of the German state where Frankfurt is located.

Even if Britain is allowed to keep some rights to the single financial market, there’s still plenty of interest among other cities in capturing a chunk of London’s financial jobs.

Ireland’s foreign investment agency has written to businesses with offers to help them relocate to Dublin, while Stefan Franzke, chief executive of Berlin Partner, an agency sponsored by the state and companies in Berlin to promote the German capital, has assembled a 12-person team with the task of attracting more business from London to Berlin.

In Paris, Prime Minister Manuel Valls last week publicly called for Paris to be “the premier financial market of Europe,” pledging to extend a favourable tax regime for expatriates and to create places in bilingual schools for foreign children.

Write to William Wilkes at william.wilkes@wsj.com

This story was first published by The Wall Street Journal

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