Why the Brexit will help Paris to attract new investments ?

by Véronique Queffélec on septembre 4, 2016


Brexit was a shock that only few expected. The upcoming exit of the UK will have economic consequence for the Union as well as for the EU that are still difficult to forecast.

A long-term increase in uncertainty

Brexit means higher uncertainty in the EU. The UK will have to negotiate the exit while maintaining Northern Ireland and Scotland in the Union and signing new trade agreements with EU countries. This will take time and human resources.

This risk increase is unwelcomed by international investors. In the meantime, European Banks, excluding Deutsche Bank, are more stable now than they were before the crisis, which increases stability in the Eurozone. Moreover, the US Dollar is strong against the Euro, which makes Euro investments cheaper.

Should international investors still want to invest in Europe, they will necessarily diversify their investments and invest in the Euro area.

Paris, the next first financial place in Europe?

Standard & Poor’s believes that Paris could become the first financial place in case of Brexit. The city of Paris launched recently new investments in Infrastructure, in a project called “Grand Paris”.

The upcoming 2017 presidential elections will be crucial to Paris attractiveness. While most of the candidates have announced their programs, the economy will be at the core of this election and candidates are expected to explain how they want to attract international investments. The need for structural reform has been raised over the last few years and has been understood by most candidates.

France need clear, consistent and precise fiscal rules. If the new President is able to implement new fiscal and economic reforms, Paris may be the place to invest in.