Imitation may be the most sincere form of flattery, but it is doubtful whether anyone in Switzerland is thanking the City and the British Bankers’ Association for coming up with the idea that London should seek a Swiss-style relationship with Europe once Brexit is fully consummated.
The reason Swiss banks and finance firms are so well entrenched in the City is precisely because the UK is in the EU and Switzerland is not. It has taken Switzerland more than 20 years to negotiate around 100 separate bi-lateral agreements with Brussels and yet businesses have still had to relocate key leadership teams outside of Switzerland to sustain Single Market access.
In the 1980s, when I worked in Geneva and the Single European Act and Treaty of Maastricht came into force, many Swiss friends were frantically hunting down a French, Italian or Iberian relative so they could get EU nationality and a passport in order to take advantage of the right to live and work anywhere in the EU which the British voted against in June.
The Swiss voted in a referendum in 1992 against joining the European Economic Area (EEA) so they do not sit alongside Norway and Liechtenstein as quasi members of the EU. When I was at the Foreign Office under Tony Blair, I got the rules at UK airports changed so that the Swiss could enter in the same channel as EU citizens instead of waiting in line with Nigerians, Pakistanis, Indians and Americans.
The EU, with British prodding, has always tried to accommodate the Swiss, but in February 2014 Switzerland voted against allowing EU citizens free movement into the country. The move was initiated by the Ukip-style anti-EU Swiss People’s Party. It covered the country with posters showing hordes of African and Arab-looking people “invading” Switzerland.
In fact, 27 per cent of the Swiss population is foreign born and hundreds of thousands of Italians, Spaniards, Portuguese and East Europeans have helped grow Switzerland into the richest democracy in Europe.
Brussels reacted negatively to the unilateral and highly xenophobic anti-EU Swiss referendum and told Berne that relations with the EU were two-way. If the Swiss rejected Europeans, then the EU would look again at the scores of bi-lateral deals that allow Swiss firms to trade profitably with their neighbours.
A deal was cooked up which might have satisfied Brussels but then Brexit happened, and the Swiss Parliament and Federal Cabinet have a nightmare autumn ahead as they try to square their referendum decision to stop free movement from Europe with the clear economic interests of just about every sector of the Swiss economy to maximise Single Market access where possible.
The dilemma for Chancellor Merkel and for Brussels is that, if they accept the Swiss can cherry pick which bits of the EU they like, that plays into the hands of Marine Le Pen in France, Germany’s Frauke Petry, who heads the anti-EU Alternative für Deutschland, and other politicians who want to bust up the EU.
So the Swiss are caught between an Alpine rock after their populist plebiscite and the hard place of not wanting to lose any access to the profitable EU market where the multi-lingual Swiss are so at home.
As they work on their EU dossier with some of the most skilled trade and other diplomatic negotiators in the world, the last thing the Swiss want or need is to be mixed up with the City’s dilemma over Brexit and the fears that a large chunk of UK banking business now has a question mark over its future if the Brexit vote is translated into full, complete rupture with the other 30 EU and EEA economies.