UK Presses For Swiss Financial Services Accord

Tom Burroughes

29 January 2021

The UK intends to push ahead with a trade deal with Switzerland over the countries’ major financial services sectors, UK finance minister Rishi Sunak is reported to have said this week.

The nations want to agree a mutual recognition deal in which they would accept each other’s main financial rules, contrasting with how the European Union had rejected such an arrangement with the UK.

After the UK freed itself from the EU, London’s financial centre is keen to ink deals with other hubs such as Switzerland and Singapore.

In the trade deal agreed by UK Prime Minister Boris Johnson and the EU, questions were left unanswered about the status of UK financial services, which account for almost 7 per cent of UK gross domestic product – the seventh-highest ratio of any country in the OECD (source: House of Commons Library, 2018). The stakes for the UK and Switzerland are high: Switzerland’s financial hub makes up about 12 per cent of its economic output. Even after the demise of Swiss bank secrecy (at least for cross-border clients) and the arrival of negative interest rates, the Swiss financial sector packs muscle. It is home to almost 250 banks. Switzerland remains top of the cross-border tree, holding $2.4 trillion of such money in 2019, out of a global total of $9.6 trillion (that figure has almost certainly increased). The UK is at £300 billion, with Luxembourg holding the same amount. Hong Kong stands at $1.9 trillion; Singapore at $1.1 trillion; the US at $800 billion (Delaware structures, etc); the Channel Islands ($500 billion) and the United Arab Emirates ($500 billion), according to a report in 2020 by .

“The UK and Switzerland are both global financial centres, with a shared commitment to high standards of regulation, market integrity and investor protection,” Sunak, Chancellor of the Exchequer, said in a statement (Reuters: 27 January). “Our ambition is to deliver one of the most comprehensive agreements of its kind in financial services as part of our plan to seize new opportunities in the global economy now we have left the EU.”

Brussels had rejected London’s request for mutual recognition in the trade deal it struck with the UK, instead demanding a full alignment of rules, as its price for future financial market access.

One consequence of Brexit is that UK-based exchanges will once again offer trading in Swiss shares from 3 February. The EU and Swiss policymakers in Berne have been at loggerheads over Brussels’ move to ban EU investors from trading on Swiss bourses because of a treaty row.