Is the UK Financial Sector at Risk after the French Elections?

Macron and Brexit
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May 14, 2017 By: , No Comments

French President May Lure Business Away from the UK

The election victory of Emmanuel Macron is significant on multiple fronts. For starters, the European Union was facing a test for its very survival when the French went to vote in April and May 2017. It was as much about the future of France as it was a referendum of multilateralism and the cohesion of the European Union. As one of the most powerful and influential countries in the European Union, what happens in France matters for greater European stability. The French president has the broadest range of powers of any European leader, and the election of Macron is not something to be taken lightly. Far right populism failed dismally in the election, and Marine Le Pen was relegated to the annals of obscurity.

But politics in France is far from safe and secure. The battle now turns to Parliament where the new president is desperate for greater representation. As for France’s relationship with the United Kingdom, there are many important questions that need to be answered. For starters, will President Macron seek to lure business away from the City of London to Paris? The answers it appears is a definitive yes.


The UK and France are on Opposite Ends of the Political Spectrum

The UK economy, and more specifically the financial services sector is teetering. Many major financial companies have either publicly voiced their desire to relocate jobs and offices to European countries, or are in the midst of discussions about it. Many alternative destinations have been cited, notably Paris, Berlin, Frankfurt, Rome, even Madrid. However, these destinations do not have the same infrastructure networks and capacity to support the massive financial enterprise that the City of London currently has.

The UK made a concerted effort to leave the EU, and by doing so rejected the concept of a UK governed by European legislation. France on the other hand moved in the opposite direction and embraced European unity as central to its identity. The UK is in the throes of political angst, what with an election coming up on June 8, 2017. If Prime Minister May and the Tories get their way, they will speak with greater authority vis-à-vis the Brexit process. But that will do little to change the minds of the Europeans, led by an impassioned and determined French electorate that voted overwhelmingly for Macron.

A hard Brexit will be difficult for Britain because it will signal an immediate break with current relationships with the EU. A soft Brexit will likely be more gradual in nature and seek to address issues like political, economic, and social relationships between the UK and its EU partners. In the absence of alternative trade agreements with countries like India, China, the US, Canada or others, Britain will suffer. France is looking to make the case for multinational conglomerates and major financial services organizations to invest in the city of Paris as the epicentre of a new European Union. The 27-member bloc faces an uncertain future without Britain, but the 2-year Brexit negotiations have yet to bear fruit. Minimal regulation in the UK has made it the most attractive European destination for financial services corporations.


Financial Services Corporations Need to Ask Hard Questions

The success of London has remained despite the creation of the euro, and the purchase of major UK banks and financial institutions by European companies. Consider that the value added to the United Kingdom economy by insurance services and financial services corporations amounts to £124.2 billion. That is 7% + of the gross value. Without making accommodation for passporting services of UK financial firms, there are serious doubts about the viability of the UK’s financial services sector.

These financial corporations will want to have many issues addressed before a Brexit becomes a reality. For starters: will they be able to passport their services to European clients? In the absence of such an agreement, will it be more beneficial to remain in the UK or relocate to Europe? Will new trade and other relationships between the UK and countries like India, the US, Canada and China take precedence over the EU? The pundits are unequivocal in their perception: financial services companies are leaving the UK, and as much is evident with spread betting activity at leading brokers.

If Macron follows through on his promises to modernize the French economy, reduce taxes, provide incentives for academics and financial services personnel, he may just swing things in France’s favour. He won the election easily, but he may face an uphill battle against France’s largely socialist-style economy to try and lure big business back to the country.


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Brett Chatz

About Brett Chatz

Brett Chatz is a graduate of the University of South Africa, and holds a Bachelor of Commerce degree, with Economics and Strategic management as his major subjects. Nowadays Brett contributes from his vast expertise in online trading for


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