Financial agreement between the UK and Switzerland
Chancellor Jeremy Hunt has signed an agreement that, according to him, will facilitate business transactions between Swiss and British financial institutions.
Financial services trade between the United Kingdom and Switzerland is worth over £3 billion. The new Berne Financial Services Agreement stipulates that the regulations of both Switzerland and the United Kingdom will be acknowledged and accepted. “By expanding each other’s markets to the other, we are increasing competition and variety,” Mr. Hunt explained.
The chancellor maintained that the agreement could only have been achieved due to the United Kingdom’s withdrawal from the European Union. Mr. Hunt stated that the “new form” of agreement departs from “aligning legal structures” that can serve as a model for future transactions.
Firms headquartered in the United Kingdom will have the ability to cater to Swiss consumers with minimal dependence on well-known UK firms; the agreement stipulates the opposite for Swiss firms.
Mr. Hunt stated that organisations engaged in “asset management, wholesale insurance, and banking markets” will gain the most.
Negotiations have been ongoing since June 2020, during the chancellorship of Prime Minister Rishi Sunak. The executives of British financial institutions have expressed satisfaction with the “dynamic” nature of the agreement, signifying that the partnership will develop in tandem with regulatory changes in both markets.
More than $2 trillion in wealth is held in Switzerland by some of the wealthiest individuals in the globe. Additionally, it serves as a significant hub for insurance and re-insurance, the processes by which insurance companies safeguard themselves against catastrophic or unusually large losses.
This is another significant advantage of London, as it accommodates Lloyd’s, the largest insurance market globally.
According to Mr. Hunt, “this type of agreement capitalises on the United Kingdom’s strengths.” He conceded that the change will only be “modestly beneficial,” but added that it “sends a signal that the United Kingdom is moving forward as a financial centre.”
It is understood by the sources that obtaining approval from the insurance sectors in both nations constituted the most challenging aspect of the agreement.
Following the United States and China, it ranks as the third most significant non-EU trading partner of the United Kingdom. Finance chiefs in the United Kingdom hope that the Swiss deal will serve as a model for agreements with other significant financial centres.
The prominence of London as the foremost financial hub in Europe has experienced a decline in recent years due to the relocation of share trading for European companies to European exchanges, such as those in Paris and Amsterdam.
A number of prominent British corporations, such as ARM Holdings, have also relocated their primary stock market listing to New York.
In the interim, one of the largest and oldest institutions in Switzerland, Credit Suisse, has failed.
Regarding Thursday’s meeting between Mr. Hunt and his counterpart, Karin Keller Sutter, the signature will elicit some support from both parties.
In addition to the financial services agreement under discussion, the United Kingdom is presently engaged in negotiations with Switzerland for a more comprehensive and profound free trade agreement. Following the United Kingdom’s withdrawal from the European Union, the government has been endeavouring to revise financial regulation in an effort to increase London’s appeal relative to other European competitors.