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Which European City Will Replace London As Europe’s Financial Capital

Which European City Will Replace London As Europe's Financial Capital

Over the last century, London has established herself as Europe’s financial capital by ensuring and developing economic certainty, legal stability, political stability, and globalization. These four major achievements have placed London far above other European Cities in attracting business and investments and established London as Europe’s Financial Capital. Which role will London play after Brexit? Which European city will replace London as Europe´s financial capital?

Brexit creates economic uncertainty, legal instability, and political instability as Britain implements her new constitution. This instability and further challenges like Euro-clearing and pass-porting, highlight the effects of Brexit on London and her ability to remain as Europe’s financial center. Europe needs a new city as it´s financial capital to replace London, which ceases to be a European city

Britain has further failed to reach a Trade Agreement with the EU, provoking a hard Brexit ahead of the deadline for a deal. The remaining European Union member states must then find a suitable replacement for London to ensure the stability of the EU as a global financial marketplace.

Here we take a look at 10 European states that can replace London as Europe’s Financial Capital:

1. Paris, France.

france landmark lights night

Paris could rank first in replacing London given her reputation as a business center, accessibility to other global markets -bolstered by her technological advancement, multicultural environment, infrastructure in telecommunications and transportation. The French Government has also ensured a favorable climate for business. The added availability of qualified staff with efficient spoken languages places Paris on the radar of any business looking to establish itself away from London. Similar to Financial Times, we can pose the question: Is Brexit London´s loss and Paris´s gain?

The major issues that remain in Paris are the high costs of office space and staff and the pollution levels in the city. Working and living in Paris will challenge you to learn the French language and culture, but still have a chance to connect with the English speaking global community.

2. Frankfurt am Main, Germany.

architecture bay bridge buildings

Frankfurt, the German financial city ranks favorably given her reputation as the financial heart within Europe, a business center, access to global financial markets bolstered by infrastructure development in telecommunication and external transportation systems (FRAPORT). Most international air travel through Europe pass through Europe’s largest Frankfurt airport. Frankfurt also hosts the European Central Bank (ECB) as the center of Europe´s monetary policy and the center of German´s monetary policy with the German Central Bank. As one of the most international cities in Germany, Frankfurt, therefore, offers ample availability of qualified staff and office space, and efficiency in languages spoken. However, the cost of staff remains high while the quality of life of employees can be better in the city.

A study carried out by the Ifo Institute in 2018 aimed at quantifying the medium and long-term implications (quantitative effects) of Brexit for the economic and employment development of the German state of Hesse (Ifo, 2018). Their quantitative effects were estimated using the New Quantitative Trade Theory Models (NQTT-Ms), which is a modern CGE (Computational General Equilibrium) model, newly calibrated to quantify the state-specific effects of the State of Hesse. The findings of the Ifo Institute Study tell an optimistic story. The Ifo Insitute found that the metropolitan city of Frankfurt should expect a lower negative impact at the state level. In “soft Brexit” the impact is optimistic than the impact in a “hard Brexit scenario.

3. Amsterdam, Netherlands.

The city of Amsterdam is well known for the business climate created by the Government. The city has a reputation as a business center and this acts in self-promoting businesses established in the city. The languages spoken are efficient for businesses. These organizations also enjoy a pollution-free environment.

4. Berlin, Germany.

Berlin is easily recognizable as one of Europe’s top business cities. The city’s value for office space is also an added advantage for businesses looking to establish themselves in Berlin. This is bolstered by high-quality infrastructure in telecommunications, and internal transportation systems. The languages spoken in the city are also efficient for business organizations.

5. Barcelona, Spain.

Businesses looking to establish themselves in Barcelona will enjoy the availability of office space and good quality of life for their employees. The city’s reputation as a business center will also self-promote any businesses established in the city.

6. Madrid, Spain.

Madrid offers businesses readily available office space, qualified staff at favorable costs with a good quality of life for employees. The city has a reputation as a business center with good market accessibility. This is bolstered by the city’s developed infrastructure in telecommunications and its internal transportation system.

However the city can better manage its pollution levels.

7. Brussels, Belgium.

Brussels could also serve as an attractive financial center as the “European Capital” of the European Union hosting most of the European Institutions:

  • The Council of the European Union
  • The European Commission
  • The European Parliament (Brussels, Luxembourg, and Strasbourg)
  • … and others.

Businesses established in Brussels enjoy the availability of qualified staff with an efficient language spoken in the city. The reputation of the city self-promotes the businesses established in this city. The infrastructure systems in telecommunication and external transportation are also excellent.

The cost of staff in Brussels is however a red-light for most businesses.

8. Munich, Germany.

Munich enjoys a reputation as one of Europe’s top business centers. The businesses established in this city enjoy self-promotion, availability of qualified staff with good quality life, well-developed infrastructure systems in telecommunications, internal transportation, and external transportation, and freedom from pollution.

However, availability of office space, value for money for office space and cost of staff remain quite high in the city.

9. Zurich, Switzerland.

Zurich offers the availability of qualified staff within an excellent business climate created by the Switzerland Government. It has excellently developed infrastructure in telecommunications and both internal and external transportation systems. The languages spoken in the city are efficient in a pollution-free environment with an excellent quality of life for employees.

The value for money for office space and availability of this office space are a major issue. The cost of staff is also high. 

10. Milan, Italy.

Milan enjoys a good reputation as a business center with good market access. Businesses established in the city will enjoy self-promotion from this reputation.

However, the business climate created by the government is quite negative. Value for money for office space and pollution in the city remains a major issue.

Financial Education from Financial Times

Synergy between Health and Economics: Oil-Price-Crash or Corona-Crash

Health shocks can also cause economic shocks (ceteris-paribus). The coronavirus pandemic is one of the health shocks that might unravel another global economic shock. Why is that the case? Fact number one, health is a basic human need. Consequently, the satisfaction the health needs requires human decision-making in all economies. Decision-makers face the challenge of managing the synergies between health and economics amid a health shock. How is the Scenario? Simultaneously, economic shocks unveil themselves amid health shocks as the pattern of decision-making changes with time. The time-lagged impact of change in decision-making is revealed through market reactions and is observable. Markets not only react to consumer choice and entrepreneurial decisions but also react to government decisions.

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Macroeconomic objectives of Economic Policy

All macroeconomic objectives could be affected by health and economic shocks. The potential reactions of markets are; the increase in market price volatility, the demand and supply shocks, among others. Economists of different schools of thought may differ in their economic forecasts, but the assumptions of any approach should be tested and empirically evident. The objective of the scientific approach should be to explain the global economic impact of the coronavirus. In the coming days, we will have the chance to observe; how strong or weak the global impact of the health and economic shocks will be in different economies around the world.

What is Health Economics?

Health Economics is the scientific branch of economics that deals with healthcare provision (supply) and healthcare utilization (demand) and how society makes coordination choices to meet the healthcare needs of its population. Economics as behavioral science influences health economics as a subbranch through the contribution of economic thought to healthcare issues. For example, we may see the solution to the following question: what are the most important behavioral choices of society that would help find the first-best allocation of healthcare goods and services in a world of scarce resources. The Coronavirus-Pandemic is the current health issue that is stress-testing our healthcare systems on a global scale. How we will deal with the pandemic depends on the behavioral incentives and contingencies to be resolved. In summary, health economics is the branch of economics that deals with the decision-making of how to allocate resources to health provision in economies. European countries have compulsory social welfare systems that coordinate health risks, while some economies have a voluntary system of insurance or no backup system in place.

How did the world economies react to the coronavirus pandemic outbreak?

It all started with the coronavirus pandemic outbreak somedays before 31.12.2019 in the Wuhan province in China. The first cases of the COVID-19 were reported to the World Health Organization by the Chinese government officials. Days after the World Health Organization reported the decease outbreak to the public on 05.01.2020. Globally, the reactions remained moderate and optimistic towards the ability to resolve the emerging disease. As reality became more prevalent and the cases wouldn’t be contained in China but spread around the world, the world Governments reactions as decision-makers were divergent and showed less global coordination. China put a whole province under quarantine, while most countries continued with life, as usual, giving out mild health alerts to the public.

Belated reaction of Governments

Maybe, the governments wanted to buy time to set up contingency plans, consult with experts on how to manage the unavoidable risks. The belated plan of actions by governments might have accelerated the spread of the coronavirus.

Economic slowdown, hoard purchases and travel bans

Simultaneously, the staggering impact of economic activities due to production stops in China channeled a global slowdown on the delivery of goods, services and the global supply (value) chain. The imposed travel bans and quarantines could heavily hurt the mobility of the people, the global flow of migration and tourism around some hotspots. Public life (e.g. traveling, local transport, retailing, etc.) in affected regions had been slowed down due to quarantines imposed by Governments, leading to hoarding behavior, the closing of industries and production, travel bans and other limitations to public life.

Global oil crash or Corona-Crash in Financial Markets

As expected, the impact was still to become visible in public life. The economic pressure has slowly become visible through reactions in financial markets. Financial markets are volatile markets, which adjust their valuation of assets in very short periods.

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The oil-price-crash on 09.03.2020 agitated the global financial markets three months down the path. The reason for the price downfall was caused by the OPEC negotiations, which ended without a compromise. The over-production of oil, coupled with low demand for oil, led to the downfall of the oil price in the stock exchanges around the world.

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    Health shocks can also cause economic shocks (ceteris-paribus). The coronavirus pandemic is one of the health shocks that might unravel another global economic shock. Why is that the case? Fact number one, health is a basic human need. Consequently, the satisfaction the health needs requires human decision-making in all economies. Decision-makers face the challenge of managing the synergies between health and economics amid a health shock. How is the Scenario?
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