The UK and Switzerland have pledged to negotiate a financial services trade agreement to enable cross-border market access after the Brexit transition period ends.
Chancellor Rishi Sunak and his Swiss counterpart Ueli Maurer last night said they wanted to reach an agreement that would enable cross-border market access for wholesale financial services relating to insurance, banking, asset management and capital market infrastructure.
Leading Swiss financial institutions such as Credit Suisse and UBS have extensive operations in London, with nearly half of all Swiss financial services imports coming from Britain.
Once the post-Brexit transition period comes to an end in December, the UK will lose the benefit of existing EU trade agreements with Switzerland, which is not a member of the bloc, but will be able to strike its own trade deals.
Sunak said that such an agreement showed it was possible to achieve cross-border trade in financial services, while recognising and respecting that different jurisdictions can achieve the same outcomes in different ways.
Sunak said the agreement was “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 chancellor’s remarks allude to the UK’s attempts to obtain similar access to EU financial markets from next year, which have made limited progress.
Brussels yesterday dismissed Britain’s proposals as “unacceptable”, with EU chief negotiator Michel Barnier confirming that the UK had missed the deadline to complete its post-Brexit assessments on equivalence with the bloc.
Britain has already completed an assessment of the rules used by the Swiss stock exchange and found them to be “equivalent” to its own, Sunak said.
Technical work with Switzerland will begin immediately, he continued, with “financial dialogue” starting in September and a stock-take on progress at the end of 2020.
“As soon as our equivalence powers come into force, we’ll lay the necessary legislation so we can start trading on each other’s stock exchanges once again,” Sunak said.
This will allow investors in Britain to buy and sell shares on the Swiss Exchange, and Swiss investors to do likewise on the London Stock Exchange and other platforms in London.
“Switzerland and the UK have become much closer as a result of Brexit. London, Zürich, Geneva and Edinburgh are the largest European financial centres outside the EU in Europe, and this agreement creates a strong alternative to the EU for financial services businesses entering Europe,” said Michael McKee, partner at law firm DLA Piper.
The City was quick to welcome news of the negotiations. Miles Celic, chief executive of industry body The City UK, said the UK and Switzerland were “natural partners for financial and related professional services trade”.
Catherine McGuinnes, policy chair at the City of London Corporation, said she “warmly welcomed” the agreement “setting out a pathway towards an unprecedented level of mutual cooperation for financial services trade between our two countries”.
“This sends out a signal to the world that we remain an open trading nation, connecting the world to capital, and keen to work with like-minded partners,” she added.