Specifically, the UK-Swiss deal is based on the mutual recognition of regulatory regimes and is positioned to strengthen London’s financial standing post-Brexit. Representatives from the UK government cited by the Financial Times asserted that the agreement is made possible by the UK’s newfound flexibility to negotiate independent deals following its departure from the EU.
During his visit to Bern, UK Chancellor Jeremy Hunt is scheduled to sign the Bern Financial Services Agreement alongside his Swiss counterpart. The agreement involves mutual recognition of domestic laws and regulations related to financial services, streamlining business transactions for corporate and wealthy clients in both markets. The Treasury emphasised a commitment to international standards and shared beliefs in open and resilient financial markets as the foundation of this relationship.
Rishi Sunak initiated negotiations for a mutual recognition deal with Switzerland in 2020, aiming to reflect a common vision of an ‘open, global, and free’ economy.
The UK director at the European Centre for International Political Economy suggested that the deal with Switzerland may be more advantageous than the regulatory ‘equivalence’ framework with the EU, a scenario that would have been in place if the UK were still an EU member. Switzerland, being a significant trading partner for the City of London, manages around USD 2.4 trillion of assets and ranks as the UK’s third-largest non-EU trading partner according to the Financial Times.
In essence, the agreement aims to restore permanent UK access to the Swiss financial sector while opening routes for a more comprehensive trade deal.
How will the deal impact the insurance sector?
Financial Times further reports that, in the insurance sector, the agreement addresses concerns raised by senior industry figures regarding trading between the UK and Switzerland’s specialist insurance markets. Specifically, London-based insurance brokers will be exempt from new rules, sparing them from establishing branches in Switzerland for placing clients’ risks with local insurers.
According to the Treasury, UK trade in financial and insurance services with Switzerland experienced a 53% growth from 2016 to 2022, reaching GBP 3.28 billion in 2022. Representatives from TheCityUK view the deal as a promising development, surpassing the ‘equivalence’ agreements offered by the EU. They also emphasised the potential for further development over time, suggesting that this deal could serve as a model for future agreements with other markets.
