(Editor’s note: The first version of this post mentioned Vienna. Unfortunately, Vienna did not make the cut, based mostly on availability of managerial talent. Of course, we could be talked off this position. Also, we’re getting comments that the rental and purchase rates from Numbeo are under market rates. That said, they are averages.)
The race to replace London as Europe’s financial and startup capital has begun.
An economic-development official in the Netherlands fired the first shots over the bow Monday, letting “leak” that unidentified Asian companies are looking to relocate to Amsterdam in the first hours after Brexit. Dublin’s startup development officials were next, circulating an email that Brexit is an opportunity to attract Europe’s serial or first-time entrepreneurs
Okay, you are chief operating officer at a big financial firm, or even at a successful startup. Your CEO is a German expat, and you have attracted techpat talent from all over Europe.
(A survey by startup incubator Wayra found that one in three UK tech startup workers come from outside the country, with the majority from E.U. countries.)
You’re based out of London now, but with Brexit, you realize some significant portion of your employees including some of your irreplaceable staffers could be declared persona non grata in the U.K. Worse, the majority of your revenue comes not from the United Kingdom, but from E.U. member states. Many economists are betting Britain won’t have the same access and privileges after Brexit to the single market.
Now, you have to crunch the data and submit a recommendation to your board on where to go within the E.U, which of course excludes obvious choices such as Zurich. And the truth is, our list could be a useful tool if you suddenly find yourself country shopping.
This is an entirely different exercise from nominating cities for future Silicon Valley. This is all prosaic economic-development parsing and data crunching.
So, what does it take to equal or surpass London?
First, talent. So you need some place cranking out top talent, such as ETH Zurich – Swiss Federal Institute of Technology Zurich. And that’s why it’s going to be tough to find a city equal to London, which draws from the world’s top rated universities including Oxford and Cambridge.
Still, cities that are more affordable certainly have a competitive advantage. Cities that are fun and beautiful make it easier to attract talent. And of course, cities that have temperate climates are an easier sell.
So let’s use those criteria to rank our nominees – Paris, Amsterdam, Dublin, Berlin, Luxembourg City and Frankfurt.
We checked out several reference sites for data including crowd-sourcing data site Numbeo and found them to be shockingly accurate based on our experience. Also, we’re throwing in each city’s Global Financial Centres Index ranking, which ranks London No. 1 in the world, even ahead of New York, Hong Kong and Singapore. (Financial centers are ranked by five key criteria: “business environment”, “financial sector development”, “infrastructure factors”, “human capital”, “reputation and “general factors,” whatever that means.)
Intangibles: We rank Amsterdam at the top because it has a depth of managerial skill that nearly compares with London … and the most strategic geographic location in Europe. A few hours from everywhere from Stockholm to Zurich. People think of the Netherlands as the cute little country with canals and cheese. Amsterdam has in fact dominated global commerce since 1500, when London was still a second-rate market town that burned down with alarming regularity. Some of the world’s largest corporations are here including Royal Dutch Shell in The Hague, and all the talent it takes to keep them running.
ABN AMRO, ING Group, Rabobank and insurance giants such as Aegon are all based in Amsterdam, along with the European operations of some of the most advanced U.S.-based companies. Most importantly, English is the second language, and everyone here speaks it better than you do.
There are negatives, and one of the biggest is tourism. Amsterdam is a too-small city with too many people. That said, there are really two Amsterdams … quaint tourist Amsterdam, and all the modern business parks that ring the city. And our question has always been, “Where does Amsterdam end, and The Hague, Rotterdam and Utrecht begin? To us, it’s all one giant metro. And while it’s the third most expensive city on the list behind Paris and Dublin, it’s far less expensive than London.
Numbeo cost of living index (benchmark is London at 86.05) 77,77
Global Financial Centres Index: No. 34
Average monthly disposable salary (rent after tax) 2,374.44 euros
Beer: About 4 euros a bottle.
Meal for two at a nice restaurant: 60 euros
Rent for a 3-bedroom in the city center: 2,345.05 euros per month
Buying an apartment in the center of the city per square meter: 5,280.95 euros
Major university: University of Amsterdam. Also, Utrecht University – ranked globally in the Top 50 engineering schools – is 20 minutes away.
Intangibles: Wow, what a town. Yes, the weather can suck, but you’re at roughly the same north latitude as London. Everything else is sublime. This city is now one of the top tech innovation centers in Europe, home to Rocket Internet and other homegrown tech companies. Berlin also is adequate when it comes to more prosaic talent in banking including Number26, the new online-only “bank.” It also has swarms of expats who chip away every day at rigid legacy business practices.
Berlin is tops in the arts, the buzz from all the creative types and entrepreneurs who’ve migrated here during the last 20 years. The architecture. The music. The club scene. The food. Most people speak English. The only negative is, Berlin’s not the “poor but sexy city” it was even five years ago. People tell you rents are cheap, but they are not. This is the only city where we dispute the Numbeo figure for rent. Last summer, we searched for an apartment in the center of Berlin, but couldn’t find anything under 3,000 euros per month for a pretty small space.
If Berlin lacks anything, it’s a deep bench of management types like London, who’ve worked all over the world. And because of that, it doesn’t even rank on the Global Financials Centres Index. Which would make it difficlut to relocate huge corporations here, especially merchant banks and investment houses.
Numbeo cost of living index – 65.17 ((benchmarked against London at 86.05)
Global Financial Centres Index: NOT RANKED
Average monthly disposable salary (rent after tax) 1,956.23 euros
Meal for two at a nice restaurant: 40 euros
Beer: About 3 euros a bottle.
Rent for a 3-bedroom in the city center: 1,285.96 euros per month
Buying an apartment in the center of the city (per square meter): 3,986.54 euros
Major universities: Humboldt Universität zu Berlin, Freie Universität Berlin and Technische Universität Berlin.
Intangibles: The question isn’t, “Who doesn’t want to live in Paris?” It’s “Who can afford to live in Paris?” Paris has a Numbeo Cost of Living Index of 83.61, just a couple of points less than Luxembourg City and London, and second-highest on this list. Buying an apartment in the center of the city will run you – get ready – about 9,500 euros per square meter.
True, Paris is one of the most – if not the most – exciting cities in the world. Museums. The best food. The loveliest neighborhoods. Fashion, arts and culture till you just can’t stand it anymore. It also is one of the celebrated conventional business centers, and home to luxury goods conglomerates such as LVMH. And that’s a bit of a problem. Paris is seen in the staid world of finance as a bit, well, frivolous and Latin in character. Not that there’s anything wrong with that.
Another negative is the French resistance to speaking English, which is – for better or worse – the linqua franca of global business. In other business centers such as Amsterdam and Zurich, it’s curious to sometimes hear local businesspeople conversing in English rather than their native Dutch or German. That’ll never happen here.
Numbeo cost of living index (benchmark is London at 86.05) 83.61
Global Financial Centres Index: No. 32
Average monthly disposable salary (rent after tax) 2,157.39 euros
Beer: About 6 euros a bottle.
Meal for two at a nice restaurant: 50 euros
Rent for a 3-bedroom in the city center: 2,270.59 euros per month
Buying an apartment in the center of the city in per square meter: 9,431.91 euros
Major universities: The University of Paris – Sorbonne, École Normale Superieure, Paris (ENS Paris) and École Polytechnique (ParisTech)
(Data based on 776 entries in the past 18 months from 106 different contributors. Last update: June, 2016.)
Intangibles: Ah, you scoff. Well, don’t. Yes, this is the most boring city in Europe. It’s also one of the richest … and certainly the richest per capita in the E.U. (Only Zurich tops Luxembourg City.) And it has the Numbeo Cost of Living Index to prove it … highest on this list at 84.89, just below London.
Let’s not forget that Luxembourg City already has multiple mega financial services firms, loads of mostly expat talent, a strategic location in the center of Europe and the highest Global Financial Centers Index of any city in Europe outside of Zurich. The reason we don’t rank it higher is, this is a tiny city. Where would you put all the companies that might flee London?
Under quality of life, neither Luxembourg the city nor Luxembourg the country has canals, enchanting architecture or much in the way of arts (other than one nice movie complex). It does have the cheapest beer on this list, a couple of really neat old castles, and loads of bucolic cow pastures. But when you really think about it, what does Silicon Valley have other than access to San Francisco and San Jose? Okay, the world’s dominant digital giants. Big deal. There are no castles in the Valley.
Numbeo cost of living index (benchmark is London at 86.05) 84.89
Global Financial Centres Index: No. 14 (London No. 1)
Average monthly disposable salary (rent after tax): 3,353.33 euros
Beer: About 1.30 euros a bottle.
Meal for two at a nice restaurant: 75 euros
Rent for a 3-bedroom in the city center: 2,308.33 euros per month
Buying an apartment in the center of the city in per square meter: 7,075.33 euros
Major university: University of Luxembourg
FRANKFURT AM MAIN, Germany
(Data based on 1,525 entries in the past 18 months from 157 different contributors. Last update: June, 2016)
Intangibles: Is Frankfurt Berlin’s little brother? Hardly. Frankfurt and Munich contribute far more to making Germany the E.U.’s largest economy than Berlin. Frankfurt is a banking center, with Europe’s space exploration center in the suburb of Darmstadt. So the talent is pretty much here. It’s just that, well, Frankfurt is kind of nondescript. You fly through it. You see the skyline that earned it the nickname “Mainhattan.” Then you forget about it. It ain’t no Berlin. Is this the city that’s going to seduce talent from New York, Austin and Silicon Valley? We don’t think so. That said, Frankfurt is dramatically less expensive than any other city on the list, with many of the same quality-of-life advantages of, say, a Dublin including party centers such as Sachenhausen. Lots of talent – and the Global Financials Centres Index to prove it.
Numbeo cost of living index (benchmark is London at 86.05) 75.85
Global Financial Centres Index: No. 18 (London No. 1)
Average monthly disposable salary (rent after tax) 2,574.62 euros
Beer: About 4 euros a bottle.
Meal for two at a nice restaurant: 60 euros
Rent for a 3-bedroom in the city center: 1,540.80 euros per month
Buying an apartment in the center of the city per square meter: 5,066.67 euros
Major university: Goethe University Frankfurt
DUBLIN, Republic of Ireland
Intangibles: Not that different from London. That goes for the climate. But Dublin is a city that has evolved over the last 30 years into one of the coolest in Europe. And you’re close to travel destinations such as the Ring of Kerry, Skellig Michael and The Three Sisters, which is vying to become the Cultural Capital of Europe. Great beer. There are a ton of multinational corporations here. The downside is, this is not a bargain city except when it comes to buying an apartment.
Numbeo cost of living index – 80.83 ((benchmark against London at 86.05)
Global Financial Centres Index: No. 39 (London No. 1)
Average monthly disposable salary (rent after tax) 2,411.15 euros
Meal for two at a nice restaurant: 60 euros
Beer: About 5 euros a bottle.
Rent for a 3-bedroom in the city center: 2,199.45 euros per month
Buying an apartment in the center of the city (per square meter): 5,107.10 euros
Major university: University College Dublin, Trinity College Dublin