Slow Berne: The UK-Switzerland financial services agreement is a quiet Brexit victory
The Berne Financial Services Agreement is a mature, alignment and recognition deal that replaces regulatory empire building with mutual recognition, and political symbolism with commercial reality, says Tim Focas
New Year is usually a moment for resolutions, reflection and overconfident promises about the year ahead. Politics, by contrast, tends to start January exactly as it ended December, with noise, soundbites and little to show for them.
This year though, something feels different. On New Year’s day, while most of the country was still shaking off the excesses of the night before, one of the most economically meaningful consequences of Brexit quietly went live. No countdown clock, no speeches, no melodrama, just a legal agreement between the second and 16th ranked financial hubs that says far more about the UK’s future than years of political squabbling.
The Berne Financial Services Agreement will never dominate the headlines. However, it really matters precisely because it is boring, technical and grown up. It shows what regulatory independence looks like when it is used properly.
For the past decade, Britain’s Brexit debate has been trapped between two extremes. One side promised instant riches the moment we left. The other insisted that leaving guaranteed decline. Both missed the same reality. Any genuine gains were always going to be incremental, specialist and deeply unfashionable.
This agreement is exactly that kind of gain. In non-legal jargon, it makes it easier for UK and Swiss financial firms to do business with each other by trusting the strength of each other’s regulation. If a firm is properly supervised at home, it does not need to recreate itself abroad just to serve clients. That reduces costs, speeds up innovation and opens markets that were previously accessible only to the largest institutions. While that may sound modest, it really is not.
This deal makes it easier for UK and Swiss financial firms to do business with each other by trusting the strength of each other’s regulation. If a firm is properly supervised at home, it does not need to recreate itself abroad just to serve clients
Financial services are one of Britain’s strongest exports. They support high wages, strong productivity and large tax receipts. Switzerland, with its deep pools of private capital, is an obvious and valuable partner. Making access easier for City firms directly supports growth in one of the few sectors where the UK competes effortlessly on a global scale.
One rulebook everywhere
What makes the agreement more interesting is not just what it does, but how it does it. The EU’s regulatory model, in stark contrast, is built on harmonisation. One rulebook, applied everywhere, negotiated slowly and enforced rigidly. That approach may suit a political union, but it is far less suited to global finance, where markets move faster than legislation and innovation rarely fits neat categories.
The UK-Swiss approach is different. It focuses on outcomes rather than uniformity. It accepts that good regulation does not need to be identical to be effective. That is a fundamentally free market idea. Competition does not stop at companies, it includes systems.
Outside the EU, Britain is free to act on that principle. Inside it, this deal would never have happened. Brussels has spent years failing to reach a similar agreement with Switzerland precisely because it prioritises control over trust. That is why this should be seen as a quiet Brexit win that actually matters.
Not because it tears up rules, because it certainly does not. And not because it invites regulatory chaos, as that would be madness. But because it replaces regulatory empire building with mutual recognition, and political symbolism with commercial reality.
There is another important effect. Regulatory friction always protects incumbents. Big firms can afford duplication. Smaller firms cannot. By lowering barriers to cross-border activity, this agreement helps challengers and specialists compete internationally from London.
That is pro free market in the most practical sense. Will this single agreement transform the UK economy overnight? No. Serious growth never works like that. However, growth in mature economies comes from accumulation. One sensible deal becomes a model. A model becomes a strategy.
If Britain repeats this approach with other advanced financial centres, the impact compounds. If it does not, Brexit autonomy becomes an abstract concept rather than a usable asset. New Year resolutions rarely survive January. This one already has. On 1 January, Britain quietly chose access, trust and competition. That is how economic renewal actually begins.
Tim Focas is head of capital markets at Aspectus Group