Madrid emerges as a leading contender of Europe’s new financial hub on the completion of Brexit

corporate investment, foreign investment, invest, investment in Spain, British investors, British, Brexit. international economy, Argali Abogados, corporate law firm, Following the Brexit vote, Europe could soon be looking for a new financial centre with London in danger of exiting the picture.

Since the vote, many financial sector companies are reconsidering their options should London no longer prove the most viable. A study from JP Morgan concluded that in terms of cost, real estate in Madrid is more attractive than Paris, Dublin and Frankfurt.

Kian Abouhossein is the head of JP Morgan’s European banks equity research team. He speaks highly of Madrid saying: ‘In terms of markets with high availability and high oncoming supply, Madrid places first, followed by Frankfurt.’

He believes that over the next five to ten years, one location in Europe will emerge as the financial hub of the union.


However, other the major European contenders aren’t just sitting back and letting Spain have the field for itself.

Just days after the Brexit referendum, 4000 British executives received a letter from representatives of Paris explaining the benefits of the French capital. And Guiseppe Sala, the mayor of Milan, has toured London selling the benefits of his city.

Despite the stiff competition, Jose Luis Martin, CEO of BusinessGoOn fully believes Spain can become the new financial center of Europe, saying: ‘After Brexit this financial center will break and it will be necessary to have one elsewhere. The cities could be Frankfurt or Paris, but Madrid also has the opportunity to position itself as a financial reference for the US or Canadian economy.

‘Until now, London has been the only financial center in Europe through which all foreign investment, especially from the United States and Canada has been channeled.’

According to Luis Martin, There are many more reasons for Spain to be optimistic in a post Brexit landscape. First, it has one of the largest markets in Europe and its GDP is the 13th highest in the world. Also, with strong, well documented growth potential, Spain is very attractive for investors and it becomes even more so when tax incentives are considered; among them, 60 per cent of the transfer from intangibles is exempt from tax.

Looking forwards, he adds: ‘The possibility that the new European financial center could be formed in Spain would generate great opportunities for our economy.’ And considering that out of adversity can come opportunity, he says, ‘Consequences in the UK, that could ultimately affect Europe and Spain, could present new opportunities for the economy of our country.’

Stephen Peak, manager of the Pan European and International funds for Henderson Global Investors, thinks Spain is showing good promise, saying: ‘While the country was one of Europe’s biggest trouble spots after the Great Recession and financial crisis, the economy could grow close to 3% this year as the property market and banking sector continue to improve.’


The Spanish government is also on the case. Recently, the Minister of Economy and Competitiveness of Spain, Luis de Guindos, met with various business groups to see if they would relocate to Madrid from London following Brexit.

And president of the Community of Madrid, Cristina Cifuentes, is publicly campaigning to attract disenchanted London business players to the Spanish capital.

In a presentation, she said, ‘We’re going to put up a website in Spanish and English with an attractive image that’s going to put together all our competitive advantages. We will also put together a welcome package for any company, or any individual, relating to advice on rights and residence – anything they may need to be able to begin any kind of commercial activity in the community of Madrid.’

She added: ‘Madrid is the perfect place to invest because it is one of the most important financial centres in the world and a centre of technology and innovation. There are investors right now in Britain looking for another city [in which] to establish themselves: that city is Madrid.’


However, even now, the only certainty is that there is no certainty. Not only is it not clear when the UK will trigger Brexit, but there are voices as senior as Alistair Campbell – former press secretary to Tony Blair – saying it may yet not happen. An open memo from Campbell to the new British Prime Minister Theresa May in The New European was headlined emphatically, ‘This fight is far from over.’

He wrote: ‘[You] should put to the British public the terms on which we leave and the terms on which we could remain. A real choice of real options.

‘[You] will quickly see that Brexit as it was sold by the Johnsons and Farages will be impossible without enormous economic damage.

‘Options are what the country needs right now. A leader who sets them out, and leads a debate that rises above the awful level of the one we have just had, would be doing the country and the world a massive service, showing leadership and winning respect, mine included.’

And Theresa May herself has hinted if it is to happen, it might still not be until 2019.

After recently meeting with Germany’s Angela Merkel she said 2017 would be the earliest Brexit could be initiated. With a two year exit process necessary, that would take us up to 2019 until it would be completed.

Mrs May acknowledged that this would not please everyone but said it was right not to start anything until the UK’s objectives were clear.

The truth is that a change is not something that is widely expected to happen quickly. In fact, even JP Morgan’s Kian Abouhossein is not keen to rush with immediate concrete predictions. Instead, he says the company will study the different alternatives once the market starts to take shape following the actual implementation of Brexit should that indeed occur.

For more information, please contact corporate law firm Argali Abogados.


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