Paris vs. Frankfurt: the Battle for Brefugees

Brefugee, noun, UK, informal –  a worker who is to be displaced by Brexit

Data examines the two cities competing for banking jobs that are moving to Europe because of Brexit

• 13,200 workers to be relocated from London to the EU

• Combined, these bankers and traders earn an estimated 1.6 € billion a year

• Frankfurt and Paris are the most eligible EU cities

• Frankfurt offers more competitive living and office costs compared to Paris

While Theresa May’s statement last week that she would be willing to turn the UK into a low-tax, fiscal paradise offers a new kind of hope to the future of the UK’s economy, the fact remains that many of the jobs in the banking sector will need to leave London. That’s why the relocation experts at Movinga.de have conducted a study to consider the cost and efforts of a Brefugee exodus. In combination with the 2017 Relocation Index, here is a comprehensive view of the two cities that are expected to win the vast majority of these jobs.

Last week, HSBC confirmed plans to move 1,000 jobs from London to Paris, prompting Goldman Sachs to announce the relocation of 1,600 workers from London to Frankfurt. As both cities are EU-based banking hubs, they are heavily engaged in securing these new jobs.

These are the number of employees and positions in industry that are at stake:

When their annual salary and bonus are combined, traders and investors earn an average of 116,996.06€ per year. Collectively, those 13,200 workers earn almost 1.6€ billion. This represents a huge opportunity to the French and German economies in terms of spending money and tax revenue.

After tax, the German and French economies could expect a spending boost of almost €1 billion euros every year if they were to attract these high earners.

With an income tax rate of 41%, the French government would earn an additional €634,733,432 per year from these high earners. The German government could earn even more with their rate of 42%, potentially bringing in a total of €650,214,735 annually. Both countries could also earn billions from the additional corporation tax they would receive.

So how will the banks decide?

Taken from Movinga’s 2017 Relocation Price Index, here are the some of the costs that the companies and employees would face in Frankfurt and Paris.

The table below introduces the costs faced by firms: the average cost of office space in Frankfurt and Paris, and the rate of corporation tax rate in those cities.

Frankfurt offers companies more competitive prices for renting office space than Paris. It also has a lower corporation tax rate compared to its French rival.

The table below introduces the living costs that the employees will encounter when relocating to either Frankfurt or Paris. These costs include the monthly rental of an apartment in each city, and the cost of buying an apartment in each city. The average cost of relocating one employee and their belongings from London to Frankfurt and Paris has also been included.

It is cheaper to relocate one worker from London to Paris, which is unsurprising considering the geographical proximity of the two cities. However, Frankfurt offers workers more competitive prices for renting and buying property.