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France to pitch for City of London euro business after Brexit vote

Brexit supporters in London
Brexit supporters in London Reuters/Kevin Coombs

The Paris Bourse fell 0.67 percent on Thursday morning after making up half the losses suffered since the United Kingdom voted for Brexit. As French politicians debated the effects of the vote, President François Hollande warned that the City of London would have to give up processing transactions in euros and said that France would pitch for the business.


"There is no reason for Europe and still less the eurozone, to allow a country that is no longer a member of the European Union and has never been a member of the eurozone to continue operations in euros," Hollande said after a summit in Brussels on Wednesday.

In a separate interview with French business daily Les Echos he said France should "adapt its regulations, including fiscal ones to make the Paris financial centre more attractive".

On Tuesday Gérard Mestrallet, the president of Europlace - a group that promotes French finance - met Finance Minister Michel Sapin to discuss how to attract City bankers to Paris, which will face competition from Frankfurt, Dublin and Luxembourg.

He proposed tax breaks for employees coming to work in France who have paid taxes abroad for at least the previous five years.

The question of whether euro clearing houses can stay in London is expected to be one of the most contentious issues in negotiations following the Brexit vote.

The UK recently won the right to keep hosting euro deals in an EU court case brought by the European Central Bank.

Impact on French economy

Hollande insisted that the French economy is recovering but warned that the British referendum result will affect all of Europe.

"Brexit will mostly have an unfavourable impact on the United Kingdom and it will be through a possible recession across the Channel that there could be a risk to the eurozone and to France," he told Les Echos.

He called for "a swift and clear European response" to limit the effects.

"The shorter the period of uncertainty about the place of Britain in Europe, the more contained the Brexit consequences will be," he said.

Sapin also warned of "consequences".

"When a major economy like Great Britain is going to see its economic activity go down that obviously has effects on its neighbours," he said.

France's target of reducing its public deficit to 2.7 percent of GDP by 2017 is now unattainable, he told Radio Classique.

The Paris Bourse fell slightly on Thursday morning but had finished 2.6 percent up on Wednesday, as other European markets rallied following major drops in reaction to the British referendum result.

For more on Hollande's Les Echos interview read our press review, click here

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