Financial services trade between the United Kingdom and Switzerland is valued more than three billion pounds.
Because of the new Berne Financial Services Agreement, Switzerland and the United Kingdom will acknowledge and accept the regulations that are in place in each other’s countries.
“We’re opening each other’s markets up to the other in a way that will boost competition and choice,” according to Mr. Hunt.
The Prime Minister stressed that the agreement could only be reached because the United Kingdom is not a member of the European Union.
According to Mr. Hunt, the “new type” of agreement moves away from “aligning legal structures” and can serve as a model for future business transactions.
According to the arrangement “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” .
It is expected that businesses operating in “asset management, wholesale insurance, and banking markets” will reap the largest benefits, as stated by Mr. Hunt.
Since June 2020, when Prime Minister Rishi Sunak was serving as chancellor, negotiations have been in progress.
The fact that the transaction is “dynamic” has been welcomed by the heads of British financial institutions. This indicates that the relationship will develop over time as a result of changes in the regulations that govern both markets.
Switzerland is home to more than two trillion dollars’ worth of wealth, which is held by some of the wealthiest people in the world. In addition to this, it is a significant hub for insurance and reinsurance, which is the process by which insurance firms protect themselves against losses that are unexpectedly huge or particularly catastrophic.
The fact that London is the location of Lloyd’s, the largest insurance market in the world, is another area that possesses a significant advantage.
As Mr. Hunt put it, “this kind of agreement plays to the strength of the United Kingdom.”
While he acknowledged that the modification will only be beneficial in a “modest way,” he went on to say that it “sends a signal that the United Kingdom as a financial center is motoring.”
It has been brought to the attention of the BBC that the most challenging aspect of the transaction was obtaining agreement from the insurance sectors in both nations.
After the United States and China, Switzerland is the third-largest non-EU trading partner for the United Kingdom.
It is the goal of those in charge of finance in the United Kingdom that the Swiss accord will serve as a template for future deals with other big financial centers. Singapore was cited by a number of individuals who were contacted by the BBC.
The trading of shares of European firms has shifted to European markets such as Paris and Amsterdam in recent years, which has resulted in London’s status as the preeminent European financial center being weakened.
Additionally, it has been observed that a number of prominent businesses established in the United Kingdom, such as ARM Holdings, have relocated their major stock exchange listing to New York.
In the meantime, Switzerland has witnessed the failure of Credit Suisse, which was one of the first and largest banks in the country.
Following the EU’s pacts
When Mr. Hunt and his counterpart Karin Keller Sutter meet on Thursday, the signing will bring some joy to both parties involved in the meeting.
In addition to this deal regarding financial services, the United Kingdom is also in the process of drafting a more comprehensive and extensive free trade agreement with Switzerland.
In the wake of the United Kingdom’s decision to withdraw from the European Union, the government has been working to revamp financial regulation in an effort to make London more appealing in contrast to other metropolitan areas in Europe.
Mr. Hunt made the announcement of the so-called Edinburgh Reforms a little more than a year ago. These 31 measures included proposals to make it possible for insurance companies to invest in long-term assets like as windfarms and homes. Additionally, there were plans to eliminate a cap on the bonuses that bankers receive.
On the other hand, Harriet Baldwin, who is the chair of the Treasury Select Committee, has referred to the measures as “a damp squib.”