The United Kingdom and Switzerland are set to reinforce their financial ties with a post-Brexit agreement, aimed at deepening connections between the City of London and the Swiss banking system.
Chancellor Jeremy Hunt will sign the mutual recognition agreement during his visit to Berne, marking a significant step in bringing together Europe's largest financial centers. The accord is expected to enhance cross-border market access for a wide array of financial services offered by insurers, banks, and asset managers.
The Treasury has emphasized that this collaboration is a significant boost for post-Brexit Britain and underscores the advantages of the UK's ability to negotiate its own deals with prominent financial centers. It also highlights the unique opportunities that emerged following the UK's departure from the EU. The Treasury stated, "The Berne Financial Services Agreement is only possible due to new freedoms granted to the UK following its exit from the EU. The agreement will enhance the UK and Switzerland's already thriving financial services relationship."
The agreement is expected to facilitate business transactions for large companies and affluent individuals in both countries.
London, known for its robust financial sector, has already signed a similar agreement with New York, the world's largest financial center. However, a recent study conducted by the City of London Corporation noted that "other financial centers [are] growing faster" than London, which ranked second to its US counterpart. The report highlighted the progress made by financial hubs such as Singapore, Paris, and Frankfurt.
Switzerland, too, has faced challenges in maintaining its status as a financial center, particularly following the collapse of its second-largest bank, Credit Suisse, which required a merger with UBS for rescue earlier this year.
David Henig, a trade expert and UK director at the European Centre for International Political Economy, emphasized that assessing the impact of the agreement is challenging without detailed information. He noted that it might serve both to support existing business relationships and establish avenues for broader cooperation.
The agreement is anticipated to benefit firms like Lloyd's of London and other insurance businesses, which have encountered regulatory complexities when structuring intricate deals.
The UK government has highlighted signing new trade agreements as one of the advantages of Brexit. Earlier this year, the UK secured a deal to join an 11-nation Asia-Pacific free-trade bloc, comprising countries like Australia, Singapore, Japan, and Canada.
Labour MP Paul Blomfield, co-convener of the cross-party UK Trade and Business Commission, welcomed the agreement and emphasized the need for similar arrangements with the European Union to support British businesses. He stated, "The EU remains the largest overseas market for most British businesses, and protecting them demands similar arrangements of beneficial regulatory alignment, which will break down barriers, reduce costs, and unlock the huge potential of the UK economy."
This accord signifies a step toward strengthening financial collaborations in a post-Brexit landscape, with a focus on regulatory certainty and market accessibility.