Brexit warning: EU’s Swiss bullying is just dress rehearsal for ‘vulnerable UK’ – expert


The tit-for-tat battle over Swiss and EU stock exchanges’ access to investors loomed this week after the Swiss government failed to meet a Brussels deadline to sign up for the pact, which was negotiated more than four years. The treaty would have Switzerland, which is not a member of the bloc, adopt EU single market rules and have EU citizens in Switzerland enjoy the same rights as in their home countries. As a result, the EU is no longer endorsing a system of stock market equivalence, which expired at the end of June, meaning Swiss financiers cannot trade on stock exchanges in the EU – and Bern has responded by imposing a similar ban on EU traders.

Reto Foellmi, a professor of international economics at the University of St Gallen, told “The EU is afraid to make concessions to the Swiss in the ‘institutional treaty’ because they fear the British might use such concessions to their advantage.

“I do not think there is some sort of grand strategy against financial centres, although the EU might take a shot at the city as well because the EU might think the British are vulnerable there.

“At least in the Swiss case, they simply chose the easiest targets.”

He added: “The EU is fed up with the wait-and-see tactics of the Swiss government when it comes to the negotiations concerning the ‘institutional agreement’.

“The Swiss government concluded the negotiations, but in the ratification process going on now, even the government does not really stand to the negotiation outcome and tries to alter some terms.”

Part of the reason for the EU’s stance was an attempt to force Switzerland, which has always resisted the temptation to join the EU, to accept many of its regulations, Prof Foellmi said.

He added: “The EU simply chose the easiest target: the equivalence of the Swiss stock exchange was about to be renewed, for an unlimited amount of time.

“Certainly, the EU would like to see Switzerland closer to the EU.”

The reaction in Switzerland, so far at least, was “calm”, Prof Foellmi said.

He said: “Maybe because volumes have even increased at the Swiss stock exchange, so the ‘punishment’ does not hurt in the short run.”

Nevertheless, he added: “The EU’s reputation as trustworthy partner is severely damaged however. This undermines domestic support for a treaty.

“For instance, the belief is key that any disputes will be settled in a fair manner under EU courts.

“I think the EU shot themselves in the foot. Since the punishment does no short-term harm to the Swiss, growing resentment is the only result.”

The dispute parallels an impending confrontation between London and Brussels over financial services.

The UK would like an “enhanced” version of the bloc’s equivalence system of market access for banks, insurers and brokers, which could distinguish it from other non members of the bloc.

However, the EU’s treatment of Switzerland may suggest it is not prepared to do so, with the bloc having hopes of attracting financiers away from London to Paris and Frankfurt.

City analyst David Buik told last year their efforts were doomed to fail.

He added: “London is the centre of the universe of the financial world, apart from New York.

“Frankfurt is not even on the map.


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