Chancellor Jeremy Hunt has inked an agreement that, according to him, will facilitate business dealings between financial firms in the UK and Switzerland.
The value of financial services traded between the UK and Switzerland exceeds £3 billion.
Switzerland and the UK will acknowledge and respect each other’s legislation according to the recently signed Berne Financial Services Agreement.
“We’re opening each other’s markets up to the other in a way that will boost competition and choice,” Hunt said.
- MPs call the post-Brexit City changes “damp squib” and propose eliminating the bonus cap for bankers.
The chancellor maintained that the UK’s exit from the EU was the only factor that allowed for the arrangement.
According to Mr. Hunt, the “new type” of agreement departs from “aligning legal structures” that serve as a model for similar agreements in the future.
According to the agreement “firms based in the UK will be able to serve Swiss clients while largely relying on familiar UK firms, and vice versa for Swiss firms” .
“Dynamic”
According to Mr. Hunt, businesses engaged in “asset management, wholesale insurance, and banking markets” will profit the most.
Since June 2020, when Prime Minister Rishi Sunak was chancellor, negotiations have been ongoing.
The “dynamic” nature of the contract, which implies that the relationship will vary if regulations in both countries change over time, has been welcomed by the executives of British banking firms.
Switzerland has over $2 trillion in assets controlled by the world’s richest people.
It is also an important center for insurance and reinsurance, and how insurance companies insure against unusually large or catastrophic losses.
This is also a key strength of London, which is home to Lloyd’s, the world’s largest insurance market.
“These kinds of deals strengthen the UK’s power,” Hunt said, admitting the changes would only help “modestly” but “send a signal that the UK is moving forward as a financial centre.
” he added.
The BBC understands that gaining approval from both countries’ insurance industries was the most difficult part of the deal.
Switzerland is the UK’s third largest non-EU trading partner after the US and China.
The UK’s 4,444 finance chiefs hope the Swiss deal will serve as a model for deals with other major financial centres, and several people contacted by the BBC also mentioned Singapore.
London’s position as Europe’s preeminent financial center has weakened in recent years as trading in the shares of European companies has moved to European stock exchanges such as Paris and Amsterdam.
Additionally, a number of well-known British companies, including ARM Holdings, have moved their main stock exchange listings to New York.
Meanwhile, Switzerland experienced the collapse of one of its largest and oldest banks, Credit Suisse.
After-EU agreements
The signing will bring joy to both Hunt and his counterpart, Karin Keller Sutter, when they meet on Thursday.
In addition to this financial services agreement, the UK is also currently negotiating a deeper and more comprehensive free trade agreement with Switzerland.
Following the UK’s exit from the EU, the government has aimed to overhaul financial regulation to improve London’s attractiveness compared to other European rivals.
Just over a year ago, Mr Hunt announced the so-called Edinburgh Reforms.
It includes plans to remove caps on bankers’ bonuses and allow insurance companies to invest in long-term assets such as homes and wind farms.
However, Treasury Select Committee Chair Harriet Baldwin described the measure as “a false accusation”.
