This report examines Switzerland’s past and present political engagement with the EU,
and how this operates for one of its key industries, the financial services sector. The
report will help to inform debate around how the UK engages with the EU, by
considering the experiences of Switzerland as a European country outside the EU, with a
significant financial services industry. Key points to note are:
1) A complex approach to engagement
The Swiss approach is complex, consisting of a set of disparate sector-specific bilateral
agreements developed over time, including on Schengen but excluding financial
services, together with much informal Europeanisation, including autonomous adoption
of EU law.
2) Reliance on London for access to European capital markets
Despite there being no comprehensive services accord, the Swiss financial sector has,
so far, benefitted from largely unfettered access to the EU market, often through its
presence in London. New EU regulations could change this. Tighter regulations would
mean third countries constantly having to amend their parallel legislation, in line with
any changes in Single Market legislation, in order to maintain equivalence over the
course of time.
3) A means of moving closer to the EU
Switzerland’s bilateral approach has been a means of moving closer to the EU rather
than maintaining distance – and around 40% of Swiss legislation derives from EU rules.
4) Access to EU markets
Maintaining Switzerland’s level of access to the Single Market requires continual
closeness to the EU. A Free Trade agreement is not sufficient, especially for the financial
sector. Maintaining access to European capital markets necessitates formal
agreements and parallel legislation to that of the EU.
5) Overall
The Swiss approach is an exception, developed over time, rather than a formal model,
and is a means of closer engagement with the EU. Forgoing complete access to the
Single Market has had implications for the Swiss financial services sector, namely
through the associated necessity of establishing operations in London, and has reduced
Switzerland’s ability to engage in EU policy making
