Why investment banking and France are incongruous
Given a choice between Paris and London, any reasonable person should surely want to live in Paris.
The UK has one of the worst standards of living in Europe; France has one of the best. A married banker earning 250k with two children (one of them under six) will now end up better off after taxes in Paris (150k vs 141k in London) according to PricewaterhouseCoopers. And, according to Peter Sands of Standard Chartered, London is now the "least preferred" global location of the average internationally mobile investment banker.
Notably, however, and despite all the City-bashing, French banks are still focusing on London as the recipient-city of their new headcount in the European Union.
Last week, it emerged that Exane and BNP plan to add around 200 equity research, sales and trading jobs, mostly in London, over the next three to five years. There are also rumours that Exane is planning to relocate some of its Paris teams to the City.
Why France doesn't do banking
French banks aren't commenting on their apparent fondness for London.
Critical mass and London's large cluster of skilled bankers are undoubtedly a big factor. However, it could also be argued that French culture is innately unsuited to investment banking.
In her recent book, The Secret Life of France, Lucy Wadham, a writer formerly married to a French investment banker, postulates that French culture is all about the achievement of status through nobility and ideas.
On the other hand, suggests Wadham, English culture is all about the achievement of status through property and wealth.
It doesn't take a genius to see which belief system is most conducive to housing an international financial services centre.
Wadham also offers an explanation for why there are so many French mathematicians working in the City of London. She says maths is a major focus of the French education system because it's seen as, "...the final arbiter of intelligence...Above all, Maths is seen as the great leveller. There is no need to come from a cultivated background to have an affinity for maths."
For the foreseeable future, uncultivated French mathematicians will need to cross the channel if they want to ply their wares to investment banks.
If they stay in France, they may soon find themselves paying higher taxes anyway. President Sarkozy's new plan to eliminate a tax ceiling which currently ensures that rich people in France pay no more than 50% of their income in income tax, suggests the French could soon follow the British in raising rates on top earners.
As EU cities go, London still has an enormous advantage, even if it is smelly and expensive.
