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Property firms expect Frankfurt to win big on Brexit

German property firms expect a boom in Frankfurt as financial businesses move activities and staff out of London in the wake of Brexit, an industry survey showed on Monday.

Property firms expect Frankfurt to win big on Brexit
Frankfurt. Photo: DPA

A majority of 72 percent of respondents believed financial centre Frankfurt, rather than rivals Dublin, Paris, or Amsterdam, would gain the most from Britain leaving the European Union, the study of 555 firms by consultants Ernst & Young (EY) found.

The German property market as a whole would get a boost from Brexit, 57 percent of those polled said, with large majorities expecting prices for commercial and residential properties to increase.

Brexit could be a further push to Germany's once sleepy market, which in recent years has seen prices begin to rise more steeply.

“It looks like international investors who for now don't want to invest any more in London will flock to the German property market even more,” EY real estate expert Christian Schulz-Wulkow said in a statement.

Britain's June 23 vote to quit the EU has afflicted the powerful London financial sector with uncertainty.

With possibly years to wait until rules governing how UK businesses can trade with the EU are thrashed out, some are already looking to relocate activities that could be affected to cities inside the remaining 27 member countries.

Centrally-located Frankfurt is seen as having an advantage over European competitors jostling for business fleeing London, as it already hosts the European Central Bank and many private-sector banks.

Meanwhile, 14 percent of firms said they were already planning to reduce activities in the UK.

That was far short of the 33 percent of companies who said they would maintain their UK operations at present levels.

But “for a large proportion of the respondents, the future direction of their business still seems to be unforeseeable,” Schulz-Wulkow said.

A majority of 55 percent said the outlook was too uncertain to say how the Brexit vote would affect their UK business.

SEE ALSO: Doubts hang over Frankfurt's prospects after Brexit

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EUROPEAN UNION

KEY POINTS: Is the EU really planning to double the price of Swedish snus?

Claims over the weekend that the EU planned to bring in a new tax which will nearly double the price of Swedish 'snus' tobacco led to the hashtag #Swexit trending over the weekend. But a commission spokesman stressed on Monday that the story was inaccurate.

KEY POINTS: Is the EU really planning to double the price of Swedish snus?

Where does the claim come from? 

The Aftonbladet newspaper on Sunday ran a story based around a “secret, leaked” proposal from the European Commission for a new excise tax on tobacco which the newspaper claimed would be presented at the start of next month, with discussion then taking place between various EU member states. 

The article does not name a source or quote from or show any parts of the document, but it quotes Patrik Hildingsson, the head of communications at the snus producer Swedish Match, who it says has “received the coming report”. 

What was the reaction? 

The story generated a near viral response on Swedish Twitter. The Sweden Democrats party jumped on the story, with the Twitter account for the party’s EU MEPs tweeting using the hashtag #Swexit, which then started to trend. 

According to Charlie Weimers, one of the Sweden Democrats’ MEPs, the commission is proposing a 12.5 percent increase in tax on cigarettes, a 200 percent increase in taxes on snus, and 500 percent increase in taxes on tobacco-free snus.

In a way, this is unsurprising as snus is used by about 17 percent of people in Sweden. The tobacco product is made by grinding up tobacco with flavourings and other ingredients and placing it in small bags which are pushed under the upper lip. It has been linked to a higher incidence of mouth cancer, but is much less dangerous than smoking. 

Why is snus sensitive for Sweden? 

When Sweden joined the European Union in 1995, it was granted an exemption from the ban on oral tobacco products the European Union had brought in back in 1992. Companies are allowed to manufacture snus in Sweden and sell it to their citizens, but they are not allowed to sell snus in other EU counties.  

Is it true that the European Commission plans to force higher tax on snus? 

Dan Ferrie, a European spokesperson on tax issues, told the EU’s daily press briefing on Monday that the commission’s coming proposals on tobacco taxation would not affect Sweden’s freedom to tax the product. 

“Sweden has had an exemption since it entered the EU when it comes to the sale of snus,” he said. “The proposal that we are working on right now is not going to change that situation because the sale of snus is not permitted outside Sweden. Sweden ill as a result continue to have full freedom to set its own tax rate and tariffs for snus.” 

Already on Sunday, Sweden’s EU commissioner Ylva Johansson said that she had stressed to the commission developing the new proposals the “unreasonable consequences for Swedish snus” if it were to force a higher tax rate. 

“My judgement is that this proposal has not yet been developed to the level where it can be proposed,” she said in an sms to Swedish state TV broadcaster SVT. “Tax questions require unanimity within the Ministerial Council.”

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