London remains the primary location for business according to Cities of Influence report by Colliers International. It has emerged that many European and international companies who have roots in the UK’s capital have no plans to leave the city in the wake of Brexit, despite rival European cities fighting to take over as Europe’s financial centre of choice post-Brexit.
The ‘TLC index’ in the report analysed the size and orientation of economic output in the workforce, the size and skills of the emerging talent pool, cost and affordability of the city and country risk associated with the markets of 20 major European economies. It also took into account the inherent risks and challenges presented by labour laws which make London the most favourable city for businesses to prosper, with Paris close behind. The report says that the UK’s favourable labour laws are a ‘key factor limiting the ability of Paris to become Europe’s pre-eminent financial centre, should the City of London banking industry need or choose to relocate jobs in the wake of Brexit.’
The analysis highlights the practicalities of moving business away from the city, too.
‘Despite an initial real estate cost savings, relocation costs would offset this and in reality, no single city in Europe has the capacity to absorb any mass migration of jobs from London at short notice,’ said EMEA Corporate Solutions managing director, Guy Douetil. Further, estimations of re-allocation of employees reaches up to a staggering 100,000, a number that no single European single could absorb at such short notice. ‘A re-allocation of this scale would need to be distributed across a number of cities possessing the latent talent with financial banking services sills, and even then this could lead to labour cost hikes,’ he said, suggesting moving out of the city would prove to be far too impractical. Further, significant global businesses, including Google, have reaffirmed their interest in London as a place for business, despite Brexit, who are currently upgrading new major offices in the heart of Kings Cross.
The findings are based on current standards and regulations. A shift in political and economic landscape may see changes in the attracting qualities of the major economies studied in the report. ‘It will be interesting to measure the material impacts these changes have on the major European cities of influence we have analysed,’ said Damian Harrington, head of EMEA Research at Colliers International.
The Mid-Table Markets
The major Spanish economic hubs Madrid and Barcelona ranked highly in affordability and cost scores, but suffer greatly when it comes to labour market risks making them incomparable to London.
Surprisingly, Germany’s strongest cities, Munich and Berlin, suffer from low scores because of cost and affordability and low future talent factors. This prevented the German cities from ranking high in the Cities of Influence report and unlikely locations for businesses to set up headquarters.
High Risk Cities
Surprisingly, Brussels, home to the European Council, scored low in the study for its high risk factors. According to the report, Brussels is ‘hindered by high relative costs, and high country market risk.’ The country also had the weakest score of all of the economies studied in terms of labour market regulation, which comes as highly important for businesses choosing where to base their headquarters.