The coronavirus pandemic might have left us with a mountain to climb, but our nation’s economic recovery can be accelerated by one of our greatest trading assets: the UK’s financial services sector.
As chair of the All-Party Parliamentary Group for Insurance and Financial Services – and a former insurance broker – I know first-hand how crucial it is to the UK’s success as a nation.
It accounts for 6.9 per cent of our total economic output and 15 per cent of London’s. It is without a doubt one of the UK’s real success stories. And there is no better place to start than by deepening our relationship with another financial services leader, Switzerland.
In June this year the chancellor signed a joint agreement with his Swiss counterpart, committing to something never achieved before: an ambitious financial services-based trade agreement. With the financial dialogue starting today, both governments are now in a position to show the world what two financial services powerhouses can achieve together.
Deepening trade ties with a nation which we had £14.9bn of bilateral trade in 2018 is a major step forward for our trade agenda. But, equally as important, delivering a template for future agreements that further the UK’s interests by gaining access to foreign markets and welcoming investors and businesses to our world-leading financial services ecosystems, is real game changer.
The UK’s commercial insurance and reinsurance markets, centred around Lloyd’s of London, is one such ecosystem where brokers and insurers come together to place some of the world’s most complex risks.
It is the insurance market of choice for major global companies because it offers a dynamic network and deep reserves of capital and expertise which perfectly equip it to manage complex and challenging risks. Its unmatched global reach is exactly why Switzerland and other nations around the world want to come here and invest in the UK.
We need to be innovative and use the regulatory powers that already exist to welcome these international investors to our shores. As part of the trade talks with the Swiss, the London Market Group has developed a set of proposals for a new regulatory arrangement between the UK and Switzerland that could provide easier access for trusted Swiss firms, while growing and onshoring UK jobs and securing investment. It is a win-win situation, which I and many colleagues across the House trust the government pays heed to in approaching these talks.
Ultimately we need to reach a point where our relationship is based on a passporting style arrangement which allows brokers, insurers and reinsurers in the UK and Switzerland to trade freely cross-border, allowing brokers to have direct contact with clients in Switzerland and carriers to write business on a cross border basis.
The benefits of such an arrangement are significant. Swiss parent insurance firms, which have already passed our regulatory tests, would benefit from accessing London’s global marketplace, which would spare them some of the more onerous requirements which currently exist under the branch regime for Swiss insurers. They would have greater access to our world-beating financial services ecosystem, which in turn would incentivise them to create more jobs in the UK.
This is just one example of the work being undertaken to deepen our ties. There are of course many more opportunities to expand the reach of other strands of the UK’s financial services offering such as banking, asset management, fintech and pensions sectors.
The next six months are a crucial time for our nation, as the government completes the UK’s withdrawal from the European Union and continues its trade negotiations.
Nobody is saying it’ll be an easy period, but these crucial talks with the Swiss may just hold the key to a bright future.
Craig Tracey is MP for North Warwickshire and Bedworth, and chairs the All-Party Parliamentary Group for Insurance and Financial Services