The UK and Switzerland will agree to forge closer links on Thursday in a post-Brexit accord that aims to deepen ties between the City and the Swiss banking system.
In a move that brings Europe’s largest financial centres closer together, the mutual recognition agreement will be signed on Thursday by the chancellor, Jeremy Hunt, during a visit to Berne.
The Treasury said the tie-up was a boost for post-Brexit Britain and would ease cross-border market access for a wide range of financial services sold by insurers, banks and asset managers.
The chancellor will claim the agreement was only possible once the UK had quit the EU and was able to strike its own deals with leading financial centres.
“The Berne Financial Services Agreement is only possible due to new freedoms granted to the UK following its exit from the EU,” the Treasury told the Financial Times. “The agreement will enhance the UK and Switzerland’s already thriving financial services relationship.”
The Treasury is expected to say the deal will allow large companies and wealthy individuals in each country to more easily conduct business.
London is renowned for the breadth of its financial activity and has already signed an accord with New York, the world’s largest financial centre.
However, a recent study by the City of London Corporation, the local authority covering the Square Mile, found “other financial centres growing faster” than London, which was ranked second to its US rival.
It named Singapore, Paris and Frankfurt as making gains at London’s expense.
Switzerland has also suffered a dent to its prestige as a financial centre after the collapse of its second largest bank, Credit Suisse, which needed to be rescued earlier this year through a merger with its rival UBS.
David Henig, a trade expert and UK director at the European Centre for International Political Economy, said it was difficult to assess the impact of the agreement, which was as much about shoring up existing business as opening channels for a wider relationship.
“We don’t have any details of the agreement and that makes it very difficult to assess its impact,” he said. “It is possible that it goes beyond the equivalence agreement that the EU has with Switzerland, but again, without knowing the detail, it is hard to judge.”
The arrangement is expected to boost Lloyd’s of London and other insurance businesses, which have found it difficult to overcome regulatory hurdles when piecing together complex deals.
The UK government has presented signing new trade deals as one of the benefits of Brexit. Earlier this year, Britain struck a deal to join an 11-nation Asia-Pacific free-trade bloc that includes Australia, Singapore, Japan and Canada.
Paul Blomfield, a Labour MP and co-convener of the cross-party UK Trade and Business Commission, said the agreement would be well received across the City “and is a welcome acknowledgment from the government that providing regulatory certainty between UK industries and their most important markets is a good thing”.
But he urged the government to go further and open talks with Brussels. “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,” he said.
