London again in favour with banks amid chaos in France and Germany

Global banks are rethinking moves from London to mainland Europe as political chaos engulfs the Continent, The Mail on Sunday has been told.

Lenders have been gradually shifting operations to cities including Paris and Frankfurt since the UK left the European Union – in some cases because they are obliged to by European regulators.

But with the French government collapsing and Germany in turmoil, some are pausing any non-essential moves.

A senior banking source said the mood had changed since the summer, when French elections plunged the country into chaos. With France and Germany a ‘mess’, the UK now ‘doesn’t look so bad’, the source told The Mail on Sunday.

The French have not been shy about luring bankers and others to Paris. Adverts promoting a move across the Channel have appeared in UK newspapers saying: ‘Make It Iconic. Choose France.’

In 2016 France vowed to make its tax regime for expats the most attractive in Europe and then prime minister Manuel Valls said Paris would become ‘the financial capital of the future’.

High hopes: London is looking attractive again, after Emmanuel Macron, inset, has left France looking unstable

Emmanuel Macron, the president – himself a former investment banker – has been instrumental in the push. It has not been without results, with US bank JP Morgan opening a trading hub in Paris in 2021 in an event attended by Macron.

And last year France’s central bank said it beat expectations in attracting banks post-Brexit, boosting its balance of payments – a measure of its overseas trade.

But the exodus to EU cities, with Frankfurt and Dublin also luring Britain’s bankers, has failed to materialise in the way some expected. 

Back in 2016, the year of the Brexit vote, the planned number of Brexit-related staff relocations to Europe totalled 12,500.

Under pressure: Emmanuel Macron

But many firms have thought better and by 2022 that number had dwindled to 7,000, according to accountancy firm EY.

Now, with sentiment towards France souring, the pendulum is swinging back towards Britain.

Snap elections called by Macron led to sharp gains for the Left and far-Right, and no overall majority for any parliamentary bloc.

Michel Barnier, the prime minister appointed by Macron to try to hold together a fragile government, faced the ultimately impossible task of trying to push through tax rises and spending cuts to repair France’s debt-laden public finances.

His ousting last week in a no-confidence vote was inevitable, causing some to raise questions about Macron’s own future. The chaos has unnerved markets, sending French bond yields up.

Germany is also in turmoil, with a shaky coalition collapsing recently and the country’s once-mighty industrial base crumbling.