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Brexiteers are rushing to come forward with proposals for the UK’s future relationship with the EU that might be workable. Acronyms are bandied about furiously but a frequent reference is to the “Swiss model”. At the height of the summer holidays, the Financial Times ran a front page story that “the City” had already given up on its demands for “passporting” rights into the Single Market and had decided to push for the Swiss model instead. The story was immediately branded as “grossly misleading” by the British Bankers Association – authors of the report.
However, it is clear that serious thought is being given to the possibility of different approaches. So what actually is this model? Perhaps more importantly, will it even exist in its current form by the time the UK gets into serious negotiations with the EU on future trading relationships? In early September, the Swiss Government seemed to start backing down on the stand-off with the EU on free movement of people. Will that be enough?
There is a very clear message for the UK’s financial sector here: even if the UK Parliament decided that “Vote Leave, take control” meant that Parliament would simply enact all existing EU Regulations into UK law, it would have to continue to follow all amendments – MiFID 3, CRD 5 etc. - as they inevitably flow through in the years ahead. That is the core of the power struggle that is playing out with Switzerland. If the Single Market is to remain “single”, then all those who have access to it must agree to play by the rules that the EU alone has set for its own benefit.
Time is running out for the Swiss model. Unless the recent proposals by the Swiss government on migrant quotas are accepted by the EU, the December 2016 European Council will take a hard line – unless it is willing to reverse its policy thrust of the last few years. Either way, there will be a clear message for the Brexit negotiations – whenever they start. [...]
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