Financial and Economic Analysis
July 2016
Amsterdam well positioned
alternative after ‘Brexit’
As service providers might consider to relocate their business after the Brexit
referendum, there are opportunities for other cities to profit from this. London’s
scale and prestige are important to the services sector, however, innovative climate
and quality of living are becoming increasingly more important. Aside from
Frankfurt, Amsterdam, with its favourable living and innovative climate, is wellpositioned to attract departing service providers.
Brexit may companies to reconsider their place of business
The British vote to leave the EU is harmful to exporting companies and investors in the
United Kingdom (UK). Yet, there may be a silver lining in all this for Amsterdam. Major
international (financial) service providers may reconsider relocating their place of
business over time.
Brexit is first and foremost harmful to the economy
UK leaving the EU means that goods and services no longer can be sold in other
European countries without any restrictions. The negotiations about a new treaty will
take an extended period of time, but the impact in terms of confidence and the fall of
the British pound sterling is felt immediately. The UK is the third trading partner of the
Netherlands and if indirect effects are included, perhaps even the second. According
to the Netherlands Bureau for Economic Policy Analysis (CBP), the damage to the
Dutch economy could run as high as at least 1.2% of GDP by 2030. Amsterdam, in
which exporting wholesalers, for example, hold a strong position, will not be able to
escape from this. However, the sectors that will be hardest hit, such as the agricultural
sector and the chemical and manufacturing industry, are underrepresented in this
region.
Brexit not only inflicts pain, there also is a flip side
Rico Luman
Regional Economist Provinces of NoordHolland, Zuid-Holland and Flevoland
+31 6 83 64 98 54
[email protected]
ING Economics Department
...However a Brexit motivated reorientation also provides European cities with
opportunities
Financial and commercial service providers located in the UK (and particularly in
London), such as banks, law firms, consultants and media companies, supply more
than € 70 billion in value added to EU countries. This is much more than the reverse
and that makes establishment within the EU important. While companies are not
likely to immediately leave the UK, they do not like uncertainty. The expectation
therefore is that there will be major service providers that will relocate their
operations. This could for example be considered when a lease comes up for renewal
or when there are plans to construct a new office. In addition, London will become less
attractive as the primary head office location for American and Asian companies.
Cities that in our opinion will be considered as an alternative are Paris, Frankfurt,
Amsterdam and Dublin.
Fig 1 Its small scale puts Amsterdam at a disadvantage…
Fig 2 …but Amsterdam’s innovative climate is strong…
Global Innovation ranking 2015*
Ranking Global Financial Centers 2015
4
Amsterdam
8
Dublin
12
Frankfurt
14
London
21
Paris
Source: Long Finance, Johnson University, Insead a.o., Mercer, Economist
Intelligence Unit.
Source: Long Finance, Johnson University, Insead a.o., Mercer, Economist
Intelligence Unit. *Innovation index by country
Fig 3 …and the quality of living in Amsterdam is good…
Fig 4 …furthermore, Amsterdam is relatively cheap
Cost of Living index 2015 - Lowest position is most expensive
Ranking Global Quality of Living index 2015
Frankfurt
Amsterdam
Paris
Dublin
7
Paris
11
London
27
Frankfurt
34
London
Dublin
40
Source: Long Finance, Johnson University, Insead a.o., Mercer, Economist
Intelligence Unit.
Amsterdam
5
Most expensive
6
18
24
56
Cheapest
Source: Long Finance, Johnson University, Insead a.o., Mercer, Economist
Intelligence Unit.
Amsterdam may be small, but its favourable business
climate offers opportunities
London has been the most important global financial centre for some time, but in part
has free trade to thank for this position. What are the advantages and disadvantages
for competing cities after the Brexit referendum?
Frankfurt and Amsterdam provide a good alternative
Scale and prestige are important to (financial) service providers, however, innovative
climate and quality of living are becoming increasingly more important. It is of major
importance to be an attractive place of residence for internationally scarce software
and system developers. Other cities, including Amsterdam, stand out favourably in
this respect. Paris has scale and an allure comparable to London, but is disadvantaged
by its restrictive regulations and rigid labour market. Frankfurt is viewed as the ECB’s
seat and the surrounding cluster is probably viewed as the primary alternative for
banks. Paris is also a contender in this respect. By contrast, Amsterdam offers good
opportunities for companies looking for a more innovative climate. In view of the
increasing ICT intensity in the services sector and the development of ‘FinTech’, the
ecosystem of start-ups and large companies is of increasing importance. Especially
many American service providers, such as Google, Netflix and Oracle have established
Amsterdam well positioned alternative after ‘Brexit’ | July 2016
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a presence in Amsterdam in recent years. Furthermore, in comparison to other cities,
living in Amsterdam is still cheap, which makes it easier to attract good personnel.
Dublin in not often mentioned as an alternative to London, but as a small ‘outsider’ is
nevertheless a contender as a new place for business. With Ireland as a member of
the EMU and the favourable tax climate, many European active asset managers have
established a presence here.
Amsterdam
Frankfurt
Advantages
Advantages
•
•
Attractive tax climate
Amsterdam in becoming increasingly
better known as a city with many
innovative service providers and a good
•
•
Quality of living is at a stable high level.
With approx. 200 banks located there,
Frankfurt is the second largest financial
centre in Europe.
innovative climate.
•
The ICT infrastructure is well developed.
Disadvantages
•
Disadvantages
•
•
Amsterdam’s scale is limited.
Expats prefer other cities, including
Amsterdam.
•
The innovative climate in Amsterdam and
Dublin scores higher.
The Netherlands has relatively strict
regulations for financial institutions and
regarding variabele income.
Dublin
Paris
Advantages
Advantages
•
•
•
Anglo-Saxon language and culture.
Member of the EU and the EMU.
The cluster of (financial) service providers
is relatively small.
•
•
Less favourable geographic location.
Less attractive to live there.
Amsterdam well positioned alternative after ‘Brexit’ | July 2016
Paris has an allure comparable to London.
The quality of living scores higher than
London.
Attractive tax climate.
Disadvantages
•
•
•
Disadvantages
•
Compared to Amsterdam and Dublin,
costs of living are relatively high.
•
France has strict labour laws and a less
favour- able tax climate, for example, for
people with higher incomes.
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Amsterdam well positioned alternative after ‘Brexit’ | July 2016
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