If a week is a long time in politics, then seven months is practically a lifetime.
That is how much time has elapsed, of course, since Britain voted to leave the European Union, and we are now finally learning what Theresa May and her government want from the complex negotiations that are set to follow the triggering of Article 50 early this year.
The Prime Minister accepts that her government’s version of Brexit means that Britain must leave the Single Market, a move that has already led to warnings that financial institutions are going to up sticks and leave London for destinations like Frankfurt, Luxembourg, Paris and Dublin.
The reality is, however, that long before Brexit, banks and other financial institutions set up a network of hubs across Europe and the wider world. They are global and do not have one centre of operation.
Instead, they have many and choose to employ staff where it is most efficient for them to do so. Take, for example, German, French and Swiss banks; they don’t just have offices in their own markets, they choose to locate activities in London because of the depth of expertise available there.
Just like London has its strengths, other financial centres also have their specialisms. Luxembourg already acts as a hub for investment funds, wealth management firms and corporate finance, and enables investors to connect with different markets thanks to its unique expertise in cross-border services.
Most Swiss banks have set up in Luxembourg, using it as their hub for funds and wealth management for EU clients, leveraging a number of services that have remained at their corporate headquarters in Zurich or Geneva.
Whatever happens over the next few months and years, Luxembourg firmly believes that London will remain one of the world’s great financial centres and wants to maintain our close co-operation with the City. We are a partner – not a rival.
What is clear though is that Britain’s decision to leave the EU is likely to result in some financial institutions having to move parts of their operations from London, especially if a so-called Hard Brexit policy is pursued and no parallel trade agreement quickly agreed.
So it should be of little surprise that a number of banks, insurance companies and asset managers have reached out to us about relocating some activities to Luxembourg, attracted by the country’s stable economy, sound business approach and the fact it ranks second in the EU after London in the Global Financial Centres’ Index. But this does not mean that they will be moving their main or entire operation from London.
Employment in Luxembourg has grown over 50 per cent over the past two decades, compared to an EU average of 20 per cent, and those that do move can be assured that they will be coming to the most multi-lingual country in Europe.
Luxembourg has always attracted a high concentration of international financial professionals, and the country is not only a great place to do business, it is also a great place to live. This was reflected in Mercer’s quality of living survey, which ranked Luxembourg City as the safest city in the world, with a separate ranking by ECA International revealing that its cost of living is lower than in central London, Paris, Berlin or Brussels.
For decades, Luxembourg has developed a symbiotic relationship with London’s financial industry, and while we respect the decision of the British people to leave the EU, we want to continue doing business with London. We have absolutely no wish to see London diminished.
Others may try to steal your crown. But for us, it is all about maintaining an efficient financial services industry to allow it to fully serve its primary purpose – financing the real economy and creating economic growth.