05/07/17

Brexit good for Luxembourg?

Brexit will result in a lot of opportunities for Luxembourg, according to the debate on the UK's departure from the EU in the Chambre des Députés, reports wort.lu

Ministers and Members of Parliament (MP) discussed on Tuesday what repercussions Brexit could have for Luxembourg and how it could influence its financial centre.

While many consequences of Brexit are not yet known as the country is still officially part of the union, a few companies have already announced the extension of existing offices in the Grand-Duchy or the implementation of new ones. 

Nevertheless, it is not only the financial sector that is affected, one of the most direct consequences of Brexit in Luxembourg has been an increase in the number of applications for Luxembourgish nationality by British citizens.

The number of applications was about 60 per year between 2013 and 2015, then jumped to 193 in 2016 and already stands at 132 for the first five months of 2017 and is thought to continue climbing. 

Luxembourg doesn't need to be aggressive 

Finance Minister Pierre Gramegna insisted on the fact that when it came to Brexit, the situation needed to be de-dramatised and that one needed to look reality in the eyes. 

Luxembourg wants to keep good relationship with the city of London, he said, and even though the relationship will be different, ties between the two countries won't disappear the day the UK leaves the EU.

In terms of strategy for attracting businesses to the Grand-Duchy, Gramegna said that Luxembourg was not - and didn't need to be - overtly aggressive in trying to lure business out of London and that they would continue their strategy with a "calm hand."

Overall, he said that in the short-term, the country was looking at many opportunities and would have the chance to further diversify its financial place.

In a longer-term perspective, Gramegna stressed that Luxembourg should negotiate common rules and a transitional period, considering the importance of Britain to Luxembourg's economy. 

He cited the importance of the UK as a trading partner for the Grand-Duchy as it is the seventh largest supplier to the country and the fifth largest importer of Luxembourgish services. For the financial sector, the flow between the two countries amounts to more than €10 billion per year. 

In his opening remarks, Democratic Party (DP) MP André Bauler echoed those remarks saying that Luxembourg should show a "healthy appetite" but not run around London waving flags or descend onto the city like vultures. 

He also stressed that Luxembourg and London's financial places were linked, and that a fair Brexit deal was very much in the interest of Luxembourg.

For Christian Social People's Party (CSV) MP Laurent Mosar, Luxembourg had a lot to gain from Brexit if it plays its cards right and said the Grand-Duchy shouldn't be "naïve or aggressive," but simply ready. 

Luxembourg should not try to be London

In his remarks, the Greens (Déi Gréng) MP Claude Adam expressed concerns about an inordinate number of people suddenly moving to Luxembourg in terms of preservation of Luxembourg's environment and said Luxembourg shouldn't try and "bring London's skyline to Luxembourg."

Gramegna was very reassuring on that point though, saying that although he wanted Luxembourg to be a natural choice for companies looking to move to Europe, that the country wanted qualitative growth. 

He said that unlike Frankfurt which expected thousands of people, Luxembourg was only expecting a few hundred people to move over, and reassured the MPs that there was enough talent, school places and housing available to welcome the people who would move over.

Gramegna also addressed fears that the UK would start a race to the bottom in terms of company taxation, and reminded the parliament that the UK had been the country in Europe most eager to develop and quickly implement BEPS (OECD tax avoidance strategies) so that he couldn't imagine them completely reversing course on it.

London will remain an important ally of Luxembourg

Prime Minister Xavier Bettel said the fact that Britain had already needed nine months just to send a letter triggering Article 50, showed complexity of task ahead, but that "Luxembourg was, is and will continue to be a good partner to the UK." 

He also added that while the UK would not "be part of our family" anymore it would still be a neighbour and that ties would still exist between the countries.

Bauler had kicked off the four-hour debate by talking about Queen Elizabeth II's outfit during the Queen's speech. He pointed out that she ditched her traditional robe for a blue dress with a blue hat adorned with yellow flowers that many on social media equated to an EU flag.

Bauler then said that the referendum had left a "bitter aftertaste" and that he doubted that Brexit negotiations would go smoothly, but that in the short-term, it presented the Grand-Duchy with economical chances.

Mosar, who was the most severe when talking about Brexit, had at the beginning of his remarks made clear the UK needed the EU more than the other way round, that it was an imperative that passporting rights should be taken away from London and that the EU could not make an exception there.

Mosar added that upholding rights for UK citizens here would only happen if there was a reciprocity for EU citizens in Britain, but also urged the Luxembourgish government to send a strong signal to Brits living in Luxembourg that it would fight for their rights.

The CSV MP had also proposed the creation of a "Brexit guichet" to help individuals and companies with any questions or needed administrative measures, but the idea was voted down after Gramegna said there was no need for an additional office on it.