Britain and Switzerland have announced they are working towards a ground-breaking trade deal on financial services between the two countries. In a joint statement from both nations, both Switzerland and the UK set out their intention to form an agreement that will allow cross border collaboration for the financial sectors in their countries.
The joint statement signed by Chancellor of the Exchequer Rishi Sunak and Ueli Maurer from the Swiss Federal council sets out a framework for both countries to discuss their future relationship. It will also allow them to set rules to ensure fair competition and mutual recognition of each other’s systems.
In announcing the statement Sunak commented, “Today’s agreement is about our vision of the world economy as open, global and free – a vision shared by Switzerland, with our long history of trade and finance.”
“The UK’s financial sector is integral to the success of the British economy, creating jobs, driving regional growth, and contributing taxes that pay for essential public services.”
If an agreement is reached between the two nations this will apply to financial industries such as:
- Asset management
- Capital markets
- Market infrastructure
Many developments and changes are coming as Britain nears the end of its transition period with the EU. As a result, new trade deals and travel authorizations such as the UK eTA are gradually being developed.
The potential of a financial services trade agreement will, therefore, give the UK confidence as it negotiates its new position in the world. With large Swiss banks such as Credit Suisse and UBS possessing branches in London, this could be a crucial deal.
Key deal for post-Brexit Britain?
The announcement of this joint statement marks a major milestone for the UK as it works towards securing its post-Brexit trading relationships with over 70 countries. At present Britain is still in a transition period with the EU, with its new trading association with the bloc set to start at the beginning of 2021.
Financial services are the single biggest contributor to Britain’s GDP, with the country having the 7th largest sector in the OECD as of 2018. By striking a deal with Switzerland another major player in the world financial markets, the UK can safely shore up its position and protect its banks and institutions.
In the next steps, the two countries seek to use their Annual Financial Dialogue meeting in September to discuss the future deal in more depth. This will allow both parties to consider the nature of their expected trading relationship, how technology will play a part in this and how they will cooperate on sustainable finance.
The Swiss Federation and the United Kingdom previously agreed a “continuity deal” back in 2019. This covers the import and export of consumer goods and consumables. This would suggest there is a strong chance that the Anglo-Swiss talks on financial services could be concluded in time for the end of the transition period.
Swiss-Style EU Trade Option for Britain?
The new arrangements between the two countries seem to indicate that the UK is heading for a Swiss-style arrangement with the EU. Under this sort of agreement, Britain would be able to access some parts of the single market but not others.
Crucially, Switzerland doesn’t have a trade agreement with the EU on financial services. It would appear that this could be the case for Britain too post-Brexit.
This would mean that UK banks and financial institutions would need to set up EU-based entities as the Swiss currently do now in order to access the single market. This is because from the end of 2020 the country will no longer have passports for its financial services.
However, on leaving the EU, the UK is free to sign trade deals with non-EU countries such as Switzerland. Having an agreement with such a leading player in global finance is going to, therefore, be essential in case talks with the EU fail or are extended.
Whilst the announcement of the joint statement between Britain and Switzerland offers some hope for the future of financial services in the UK outside the EU, there are still major hurdles that must be overcome by the sector to readjust to the new realities.
Britain is set to move outside of the EU’s travel and trade infrastructure at the end of 2020. From that point onwards it is expected that EU citizens will have to apply online for a UK eTA before travelling to the UK. Find out now what requirements will apply and how to register successfully now.