Alongside large and threatening Frankfurt, loud and opportunistic Paris and plucky Dublin, Luxembourg has kept a relatively low profile in the scramble to soak up some of London’s financial services power since the UK’s Brexit vote.
But make no mistake, Luxembourg will be growing as a result of the UK’s decision. The city’s business area is packed with cranes constructing new buildings. And already firms such as AIG and M&G have announced plans to create jobs in the Grand Duchy.
Clearly in Luxembourg’s favour is its financial services expertise, built up in various sectors over more than 50 years. But, after a day of meetings in Luxembourg’s business district, a stay in the country’s picturesque capital city and a visit to its little-known wine region, Moselle, I discover there is more charm to the Grand Duchy than first meets the eye.
Luxembourg will undoubtedly be using this asset as it seeks to tempt firms into choosing its city over rivals across the continent.
David or Goliath?
Luxembourg is geographically tiny, and potentially tricky to point to on a map of Europe. But, in terms of financial services prowess, the city is a giant, on a European and international scale. The recent 2017 Global Financial Centres Index placed Luxembourg 18th, behind London in first place, but ahead of Frankfurt (23), Paris (29) and Dublin (33).
The history of the city’s association with financial services dates back to 1963 when the Luxembourg Stock Exchange listed the world’s first Eurobond. In the years since, it has developed in a number of specific areas of finance, including asset management, banking and insurance.
Nicolas Mackel, chief executive of Luxembourg for Finance, the body tasked with attracting financial services investment into the area, says:
Luxembourg has seen a lot of interest, strong interest, from a number of financial institutions...
What attracts financial institutions to Luxembourg? Basically, the fact that we are a cosmopolitan, multi-national country. Forty-five per cent of our population is not Luxembourgish. And everybody speaks at least three languages.
“The value that Luxembourg would bring is it is a member of the EU, a lot of technicalities, a lot of nationalities, and also this history of being a hub for fund distributions,” says Stephane Badey, a French partner working for law firm Arendt in Luxembourg.
A strong financial services ecosystem may be important for business leaders. But staff will be hoping their bosses also take into account softer issues when choosing cities for location.
“Quality-wise, it’s really nice,” says Nigel Fielding, the British former chief executive of HSBC in Luxembourg who has lived in the city for 18 years and has remained since retiring last year.
You can visit Paris for a weekend or Brussels for a weekend, and okay you can have a nice time. It’s only when you go and sit in those cities through a working week and you see what the traffic’s like and see how packed the metro is… You have pinch yourself a little bit to realise what you’ve got here.
Nasir Zubairi, chief executive of the Luxembourg House of Financial Technology, is another British expat currently residing in Luxembourg. “One of the things I really appreciate is the way it’s a great place for families. You go to a Michelin-starred restaurant here... with your kids. And the first thing they’ll do is look after your kids. He adds: “And the playgrounds here are fantastic.”
Zubairi is one of three people I speak to who praises Luxembourg’s “state-of-the-art playgrounds”. This, along with various references to Michelin-starred restaurants, probably offers a clue about the sort of workers Luxembourg believes it can attract: they are married, they have children, and they earn a reasonable income.
Mackel and others emphasise that Luxembourg is not going after thousands of London jobs, and he is also keen that the city be seen as a friend to the UK: “We have not had a roadshow to London, we are not running around London like headless chickens and shouting: ‘Come to Luxembourg!’”
But London, as well as Frankfurt, Paris, Dublin and others, should not underestimate the Grand Duchy.