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• Message from the President • Message to our Members • Historic Timeline and the UK-EU Relationship • Brexit, Brexit on the Wall • Facts & Figures • Overview Europe • Pre-Brexit Survey Results | March 2016 • Brexit Analyses | Deloitte, EY, KPMG & PwC • Interviews with Ambassador HE Dominik Furgler & HE David Moran • Key Findings Brexit Survey | October 2016 • Task Force Europe • CBI | economiesuisse • Members' Interviews
• Members' Comments • Brexit Event London | 22 nd November 2016 • Outlook • About the BSCC • References
Publisher: The British-Swiss Chamber of Commerce Concept, Production & Editorial Management: Silja Muehlebach, Magalie Chelius, Charlotte Gannon, Haig Simonian Editors: Charlotte Gannon, Haig Simonian, Magalie Chelius, James Woodeson Design, Layout & Infographics: on-IDLE, Marc Peter Front Cover Picture: on-IDLE, Marc Peter Published: January 2017
This date will open a chapter of two years of negotiations with the EU. In the meantime, the Swiss Government has been working on the implementation of the results of a 2014 plebiscite that requires immigration quotas for foreigners including EU citizens. Parliament’s upper house debated the “light” immigration proposal in its winter session that ran from November 28th until December 16 th, 2016.
On December 12th, parliament reached an agreement proposing a greater use of domestic workers to curb immigration indirectly. The agreement, however, bears little resemblance to the original Swiss Immigration Referendum initiated by the SVP. Britain’s vote in late June 2016 to leave the EU has complicated matters for the Swiss, who have been trying to solve their immigration stand-off for more than two years.
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Both countries are at crossroads in their relationship and negotiations with the EU, and their destinies have never been so intertwined. Against this backdrop, the British-Swiss Chamber of Commerce continues to play its vital role as the voice of British-Swiss businesses and helps shape a favourable environment for a prosperous British-Swiss relationship. To this end, we have developed and delivered topical, relevant and meaningful initiatives to support and add value to our members every step of the way. Our activities operate at different levels: • Institutionally | Our Task Force Europe examines the similarities and differences in the way Switzerland and the UK approach European issues, and particularly their respective experiences with European integration. • Publically | We are surveying our members asking for their business priorities and collecting their concerns as one voice: the views of the British-Swiss Business Community to the national authorities. • Politically | More than ever the BSCC works hard to foster the dialogue between business and politics; there will be many opportunities for both countries to learn from each other how to best manage and negotiate deals with the EU.
• Practically |We will harness the best experts within our network to bring expertise and support to our members in anticipating and adjusting their business model to remain competitive and overcome uncertainty.
As the President of the BSCC, it is extremely important for me and this institution to receive your comments, suggestions and to listen to your business priorities and concerns. It is our mission to channel those back to the relevant authorities to offer an open dialogue between the two countries. Anne-Marie de Weck-de Senarclens
President of The British-Swiss Chamber of Commerce 7
We are delighted to welcome you to our newest publication on Brexit and the Future of Europe. In light of the UK’s vote to leave the European Union in June 2016 and with so much ambiguity and volatility surrounding the future of Britain and the EU, we wish to provide a platform for the voice of the British-Swiss business community to be heard. Complemented with expert views and industry opinions, the Brexit publication serves as a forum to share your personal as well as professional ideas in relation to Brexit. In launching this interactive online publication, we hope to provide you with useful information, as we all try to navigate the uncertainty whilst taking advantage of the opportunities that will arise over the coming months. We have collated stories, surveys, facts & figures and more for your consumption to present a comprehensive picture of the Brexit business landscape.
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The key findings of the Brexit survey conducted in September and October 2016 reflect your perception of the economic, political and social climate in the aftermath of Brexit in the UK and Switzerland. We are interested to hear your first-hand experiences and stories once Theresa May has triggered Article 50 of the Lisbon Treaty. This Brexit publication is intended to provide as much insight as possible during this period of unpredictability and we are here to support you along the way. For you to have a voice, we invite you to use this publication in an interactive way; share your thoughts and comments here and join us for our Brexit related events to hear the view of the experts and exchange opinions with them on topics of bilateral importance.
Kind regards, The BSCC team
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Sources: BBC, CNN, The Telegraph 11
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EXCHANGE RATE CHF / GBP
The exchange rate between the Swiss franc (CHF) and the British pound (GBP) has been subject to drastic fluctuations since the BSCC was founded in 1920. After a volatile period, the exchange rate was stabilised by the Bretton Woods system that was introduced in 1944. The CHF / GBP exchange rate started to depreciate rapidly in the 1960s, but had been fairly stable from 1980 until June 2016. Since the EU Referendum the British pound has devalued, largely dictated by political events.
1.5 1.45 1.4 1.35 1.3 1.25 1.2 1.15 1.1
2016
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EXCHANGE RATE CHF / GBP
25
20
15
10
5
0 1920
1930
1940
1950
1960
1970
1980
1990
2000
2010
2020
1920 – 2016
Source: Swiss National Bank
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UK votes to leave the EU David Cameron resigns as Prime Minister The Queen formally appoints Theresa May as Prime Minister with responsibility for Brexit negotiations Theresa May announces the key appointments to her cabinet:
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Philip Hammond | Chancellor
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Boris Johnson | Secretary of State for Foreign Affairs
•
Liam Fox | Secretary of State for International Trade and President of the Board of Trade
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David Davis | Secretary of State for Exiting the European Union
Theresa May officially confirms that she will trigger Article 50 of
the Lisbon Treaty until the end of March 2017
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Theresa May announces withdrawal from the single market Supreme court rules that parliament must have a vote to trigger Article 50 Deadline Theresa May has set for notifying the European Council of Britain’s intention to leave the EU General Election in the Netherlands Presidential Election in France German Federal Election
Once Theresa May invokes Article 50 of the Lisbon Treaty, the 2 year negotiation period between the UK and EU begins 1) 2) 3) 4) 5)
Remaining 27 EU members discuss withdrawal Draft deal submitted to European Council (heads of state or government of remaining EU members) Approval needed from at least 20 countries with 65% of population Ratification by EU parliament Negotiation period of 2 years could be extended if all 27 members agree
If no agreement to extend negotiations can be reached, EU treaties cease to apply to the UK If the UK leaves the EU, the UK parliament must repeal the 1972 European Communities Act and replace it with a new agreement
Sources: BBC, EY
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The UK’s decision to leave the EU raises the question whether the UK will remain part of the single market or leave it to negotiate its own trade deals. The infographic below provides a comprehensive overview of Europe and its long-standing pacts that govern trade, immigration and common currency.
Source: Bloomberg Graphics, EU, ETRA & IMF 16
European Union 28-nation single market of free trade and shared regulation | free movement of goods, services, capital and people Euro Zone 19 countries using the euro currency European Economic Area EU member states in addition to Norway, Iceland and Liechtenstein | access to single market in exchange for payments | free movement of goods, services, capital and people | no ability to negotiate or vote on EU legislation but members are bound by EU social & employment regulation European Free Trade Association intergovernmental organisation promoting free trade and economic integration | Norway, Iceland, Liechtenstein & Switzerland Customs Union free movement of goods with no customs duties but with a uniform system for handling imports and common external tariff Schengen Area 26-country passport free travel zone
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This survey was conducted in March 2016 and mainly targeted the opinion of our members. The survey generated a great level of interest among our members (185 respondents) and provides some interesting insights on the ambiguity of the topic. We are keen to monitor the further development of our members’ opinion in regards to Brexit and will conduct additional surveys when Theresa May’s plan to leave the European Union becomes clearer. The BSCC provides a neutral platform for expression, but the below statistics and findings offer an insight into our members' opinions.
What is the impact on your business if Britain leaves the EU?
positive 13.50%
negative 35.58%
no impact
50.92%
20
What is the impact on your business if Britain leaves the EU?
44%
Other
39%
49%
Switzerland Britain 40%
17% 57%
11%
26%
17% positive
negative
no impact
Location
65%
> 500 26%
51 - 500 10 - 50
59%
< 10
30%
36%
46%
45%
40%
negative
no impact
9% 11% 18% 15% positive
Size of Industry / Number of Employees 21
The UK’s decision to leave the EU will inevitably cause a period of great uncertainty for businesses and individuals. Deloitte has put together this guide to Brexit to offer insight into what is likely to happen next and the potential issues to consider for immigration, mobility and reward. The government could introduce some pro-business measures in an emergency budget, what is not clear is whether there will be increased tax rates, or longer term changes to the areas of European Employment Law which has been imported into the UK’s legislation e.g. the Working Time Directive. Deloitte provides an explanation into how leaving the EU is governed under Article 50 of the Lisbon Treaty and the timelines and stages involved. The main point is to stress is that the negotiations to exit are likely to take at least two years so it is important to remember that is unlikely anything will change immediately. Companies need to give consideration to the critical aspects; any change in policies, payment aspects should be updated to reflect what the future might look like. A key point of view is to ensure that anything that is being planned but not done takes Brexit into consideration. This is the time for calm and considered decision making. Click here to read the full version of the guide to Brexit Read more: Brexit: The impact in Switzerland – Deloitte CH Brexit: Plotting a new course – Deloitte UK
Source: Deloitte CH & Deloitte UK
The British people have voted for the UK to Leave the European Union (EU). This is a momentous decision which will have significant implications for both the UK and Continental Europe. Whilst a second referendum in the wake of a period of intense negotiations between London and Brussels cannot be entirely ruled out, Financial Institutions should commence reassessing their strategic, business and operational models on the assumptions that the UK will leave the EU definitively within the next three years.
We may well see a period of market volatility particularly in foreign exchange and equity markets although Central Bank intervention and the exhaustion of immediate profit opportunities will likely ensure this period is relatively short lived. On the political front, in the UK there will be tension within the Government in the wake of the referendum campaign and probable changes of Ministerial portfolios. A general election should not be ruled out. There will be renewed calls in Scotland for a second independence referendum.
For the moment, the Referendum outcome technically changes nothing, in that the UK still remains a member of the EU and is bound by its legal and treaty obligations until such time as the country definitively exits. However, in practice much will potentially change and much â&#x20AC;&#x201D; including the applicability of future EU Regulations and Directives â&#x20AC;&#x201D; will remain uncertain during the two to three year period of negotiations between London and Brussels upon which we are now embarked.
Against the background of political and economic uncertainty, Financial Institutions will pay close attention to future negotiations surrounding the UKâ&#x20AC;&#x2122;s future access to the Single Market and in particular to Passporting and Equivalence rights for UK based institutions.
Click here to read the full publication
Source: EY
Brexit was a shock to many, but perhaps shouldn’t have been. Missing the signals of major change is even more dangerous in an increasingly Volatile, Uncertain, Complex and Ambiguous (VUCA) world. ‘Brexit’ means that the UK intends to leave the European Union. It may still remain in the EU Customs Union and European Economic Area, join the European Free Trade Association or indeed, take on elements of the Schengen Agreement – or some complex amalgam of the above, and more. Although there are broadly five paths that could be followed, the UK will likely pursue an unprecedented bespoke model. The outcome depends on trading off elements of the Four Freedoms –movement of goods, people, capital, and the establishment and provision of services –to achieve a mutually acceptable arrangement for the UK and all 27 remaining members of the EU.
Click here to read the full version of the brochure
‘Brexit’ is the the buzzword used to describe the United Kingdom’s exit from the European Union (EU). Since being coined in 2012 (although ‘Grexit’ may have come first), the verbal bandwagon spread across the world, into nouns (‘Brexiteers’), verbs (‘Brexiting’), and adjectives (with Colombia ‘pulling a Brexit’).
Click here to become familiar with the Brexit vocabulary to help you follow the debate
Source: KPMG
Business and politicians should assume that “Brexit means Brexit” and develop bold strategies to internationalise the local economy, according to the latest Northern Ireland Economic Outlook (NIEO) from PwC. PwC says that assuming the UK will enjoy continued unrestricted access to the Single Market, or that Westminster will maintain current levels of EU financial support, post 2020, could lead organisations and even complete sectors to become complacent about their future competitiveness. The latest NIEO forecasts that the deceleration in Northern Ireland’s economic recovery, which has been evident over the past year, will continue, but that outright recession is now unlikely. However, despite recent positive economic news for the UK as a whole, the report says that local output remains around 7% below the pre-recession peak in 2008 and that the region is not generating the productivity gains that will create wealth and increase wages and household disposable incomes. PwC also says that, the pace of recovery is threatened by a combination of global slowdown and post-referendum uncertainty. The region’s economic growth slowed from 2.2% in 2014 to 1.5% in 2015. PwC says Northern Ireland can expect growth of only around 1.2% in 2016 and that could fall to as low as 0.3% in 2017, in response to the Prime Minister invoking Article 50, which starts the clock on the UK’s EU exit process. Read more
With the UK voting to leave the EU, you will no doubt be considering the impact of issues ranging from Life Sciences regulations and funding to migration and trade. While the outcome of the referendum is known, we are only just beginning to get a sense of what shape the UK’s exit will take and the impact this will have on Life Sciences. The outcome will impact all of us, personally and professionally, but it can be hard to access the facts. Read more
Source: PwC
What challenges and short-term implications has Switzerland faced since the EU Referendum? The Brexit vote has complicated the Swiss-EU talks related to the 2014 Swiss Initiative on Immigration. Since any concession the EU would grant Switzerland in terms of possibly restricting free movement would set a precedent for the future UK negotiations, the EU is more reluctant than ever to enter into such a deal. The approach the Swiss Parliament has taken since â&#x20AC;&#x201C; i.e. a purely unilateral solution not interfering with free movement â&#x20AC;&#x201C; is largely due to this development.
What are Switzerlandâ&#x20AC;&#x2122;s top priorities for the near future? With regard to the implementation of the 2014 initiative a solution has to be found by February 2017. Concerning Brexit, Switzerland wants to make sure there will be no legal vacuum when the UK leaves the EU. The potential key areas for action (such as free trade, air transport, research cooperation and many more) have been identified, and both countries will have to discuss where and how they can best assure a smooth transition to their future bilateral regime. 29
The British Government is excited about the opportunities flowing from a new relationship with the European Union and the rest of the world. There are many reasons to be optimistic. Britain is open for business, committed to peace and security, and a leading supporter of the international rules-based system. We are the fifth largest economy â&#x20AC;&#x201C; the second fastest growing major economy in the world in 2015 â&#x20AC;&#x201C; and we have record employment.
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We have a positive agenda for a secure and prosperous Europe – one which benefits everyone. We want the EU to succeed, and we will want the closest possible economic links with our neighbours – including Switzerland, where British interest has never been higher. Switzerland is our tenth most important bilateral trade market. Total two-way trade was worth £32 billion in 2015, the same as our trade with Canada and Poland together. Switzerland is the UK’s fifth largest services export market, the second largest non-EU market, and the eighth largest foreign direct investor. Swiss companies provide close to 200,000 British jobs. The Brexit process has several elements – leaving, setting up new arrangements with the EU, and deepening our relations with Switzerland and other strategic partners. We will make sure that the UK remains the best place in the world to do business, not least by negotiating our own deals with the biggest international players. Leaving the EU also means that we will be able to play a global leadership role in arguing hard for free trade. Our instincts have not changed. We are the same country we have always been: outward-looking, strategic, ambitious and tolerant. A Britain more Global than ever before, with the best possible economic and political relationship with Switzerland.
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The BSCC Brexit survey was designed to get a comprehensive overview of our members' attitudes in regards to Brexit and served as a basis for this publication. While the majority of the respondents' companies operate in Switzerland, the survey attracted members across all industry sectors and sizes. The BSCC Brexit survey was conducted from September 21 st until October 10th 2016 and yielded 221 responses overwhelmingly stating that a change associated with Brexit has not been experienced yet. However, uncertainty was considered as the major concern across all participants. Access to single market was ranked as first priority whereas a clear strategy for international trade and economic agreements was seen as the second most important priority. Now, we are interested in hearing your thoughts. Please share your ideas and leave your comments here.
4%
Switzerland
20%
UK both UK & CH 54%
other
22% 20%
23%
self-employed < 10 employees 21%
16% 20%
10 - 50 employees 51 - 500 employees > 500 employees
22% 32%
Professional Services 12%
Financials 10%
Technology 24%
Education Other 34
5.43% 6.33%
7.69% 38.91% 9.05%
12.67%
19.91%
uncertainty not a concern but an opportunity possible relocation of business & operations unstable market other potential recession decline of FDI
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Has your company already experienced a change associated with Brexit?
12.67%
64.25%
23.08% yes, positive yes, negative no change
Access to single market
Clear strategy for international trade & economic agreements
Free movement of people
Protection of social benefits funded by EU
Protection of economic benefits funded by EU
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• European Economic Area • Norway & Iceland • Access to Single Market but no ability to negotiate or vote on EU legislation. • EU social/employment regulations and free movement of people would still apply, but UK could negotiate its own trade deals . • Bilateral free trade agreement only • EU's recent deal with Canada • World Trade Organisation • UK would rely on its membership of the WTO for access to European markets and as a first step towards full-blown free trade agreements with other blocs and countries (including the EU) • Customs Union: • Turkey • Free movement of goods with no customs duties, but with a common external tariff. • EU free trade agreements would apply, but only one way – i.e. opening up UK markets to third party countries, but not vice versa. • EFTA
• Switzerland. Norway, Iceland, Liechtenstein • intergovernmental organisation promoting free trade and economic integration
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First elected Member of the National Council in 2003, Christa Markwalder was the President of the National Council from 2015 until 2016. In addition to her position as a Senior Legal Counsel at Zurich Insurance Company Ltd, she has been engaged in various parliamentary groups on renewable energy, ecologically sustainable economies, relations with Eastern Europe and promotion of voluntary work. Christa Markwalder serves as a Task Force Europe Co-Chair together with MP Jonathan Djanogly. What are the challenges and short-term implications that Switzerland and the UK have faced since the EU Referendum?
The UK has faced a number of difficult issues in the light of Brexit. Many of these stem from the uncertainty the vote has caused. Firstly, the clear “pro-Remain” position taken by the UK Government meant a wholesale change of leadership was needed in light of the surprise result. Second, the lack of a clearly articulated plan, probably reflecting a partial unpreparedness, but also, to an extent, due to a negotiating tactic, has further increased problems.
The net implication has been a loss in the value of sterling and anxiety from some major multinational corporations based in the UK. A number of other “unknowns”, such as the future of the Union given Scotland and Northern Ireland's “Remain” preference, also add to this uncertain atmosphere. From a Swiss perspective, the chances to find a solution with the EU on how to manage immigration tended to zero while we try to find bilateral collaboration fields with the UK such as between our universities.
What kind of (trade) relationship should be achieved between Switzerland and the UK during UK’s negotiations with the EU? Whilst many potential options look set to be explored for a future UK-EU trade relationship, all parties involved in negotiations around Brexit should treat the maintenance – and indeed expansion – of the Single market as a clear public goal. A strong single market is a key driver for jobs, growth and prosperity in Europe and neither side would benefit from the UK losing this access. In particular, the importance to the Single Market of retaining passporting rights both into and from the United Kingdom cannot be overstated.
What does the future of Europe look like? If all parties pursue a constructive and consensus-based approach to Brexit, as outlined above, the UK's exit from the European Union need not preclude a productive and mutually beneficial future relationship between the bloc and its former member. In addition, both the Swiss and the Brexit referenda were clearly driven by populist and protectionist sentiments, largely as a reaction against cross border trade and (more widely) globalisation. Switzerland, the UK and the EU must reflect both individually and collectively to ensure that more of society feels the benefit of such trade. This would be the most effective way of promoting a positive and sustainable European future.
What is to be expected from the negotiations between the UK and EU? With the invocation of Article 50 by the UK yet to occur, it is hard to anticipate the exact nature of the EU/UK negotiations which will follow. However, even with the added pressure of key elections in EU member states, the European Union must resist the temptation to “make an example” of the UK through punitive measures. The UK and the EU are mutually beneficial trade partners and it is in neither's interest to pursue an adverserial “hard Brexit” process. Similarly, the UK Government would be well-advised to pay heed to the marginal nature of the Brexit referendum result and pursue a “soft Brexit” approach, subject to scrutiny by the UK Parliament.
The remit of the Task Force Europe is to examine the similarities and differences in the way Switzerland and the UK approach European issues, and particularly their respective experiences with European integration. Due to the often fraught politics around the EU in both Switzerland and the UK, the Task Force produces analytical work with a strong emphasis on the interest of business rather than political perspective on key issues.
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Alexis Lautenberg served as the President of the BSCC from 2010 until 2016. He is a former Senior Policy Adviser in Steptoeâ&#x20AC;&#x2122;s Brussels office and has been the Chairman of the Swiss Finance Council since its set up in 2013. Lautenberg is widely recognised for his knowledge of European affairs.
What are the challenges and short-term implications that Switzerland and the UK have faced since the EU Referendum? The single most relevant impact is uncertainty, both concerning the direction of travel and the time horizon. This affects all partners involved, starting with the UK itself, the EU and Switzerland. The judgement by the High Court, while comprehensible, introduces further unknown variables.
What is to be expected from the negotiations between the UK and EU? Again, it is widely in the hands of the UKG to decide on the customs union and the internal market. Leaving the latter will undoubtedly affect access to the internal market even if the UKâ&#x20AC;&#x2122;s body of regulation remained on par with the EU regime.
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For, the EU will insist, as it has been doing with Switzerland for a long time, that even identical regulation would have to be overseen and ultimately policed with the aim of securing the homogenous character of the market’s fabric.
What kind of (trade) relationship should be achieved between Switzerland and the UK during UK’s negotiations with the EU? The closest possible relationship, as a matter of policy. This said, up to the moment in which the UK quits the EU the present contractual arrangements remain in force. The future trade regime between Switzerland and the UK will depend on the UK’s choices as to the customs union and the single market. Should London remain in the customs union there would not be major changes compared to the present relation. In case the UK were to leave the customs union the two countries would have to negotiate a bilateral preferential agreement with a particular focus on services.
What does the future of Europe look like? The perspective of the UK’s departure faces the EU with an unprecedented challenge. This comes at a moment in which the remaining 27 members are confronted with serious security threats, a modified internal decisionmaking configuration and the future of the Eurozone. This is a tall order, the outcome of which is difficult to anticipate at this point. What can be hoped for, however, is that this already ambitious agenda may furthermore foresee a fundamental reflection on the future of the institution, that would include relations with its closest neighbours.
Before being elected as a member of Parliament for Huntingdon, Jonathan Djanogly was a partner in a commercial law firm advising businesses. In Parliament, he served in opposition as a shadow Business and Justice Minister and in government as a Justice Minister. Together with Christa Markwalder, Jonathan Djanogly serves as a Task Force Europe Co-Chair.
What are the challenges and short-term implications that Switzerland and the UK have faced since the EU Referendum? The short term implications for the UK following the Brexit vote seem to have been limited and mainly related to the fall in the value of sterling. For the most part, the UK will continue as a fully participating EU member state until such time as it leaves.
What kind of (trade) relationship should be achieved between Switzerland and the UK during UKâ&#x20AC;&#x2122;s negotiations with the EU? Technically the UK is not allowed to negotiate trade deals directly with Switzerland or any other country at any time before it leaves the EU. However, the UK Prime Minister has acknowledged that the scoping of deals can happen before we leave. In practice I would expect to see this happen once the UK has triggered Article 50; thus providing certainty to its exit.
What is to be expected from the negotiations between the UK and EU?
It is too early to say how UK/EU negotiations will go, although I hope that a deal will be agreed speedily and on good win/win terms What does the future of Europe look like? The future of Europe will be dependent from a security aspect on the UK continuing close engagement with the EU. In economic terms this will be more a question for remaining EU members who may well wish to reshape the EU following Brexit.
The people of the United Kingdom took a decision on 23rd June 2016 which will change the UK’s economic and political trajectory for decades to come.
CBI members were clear that they wanted a twin approach for the CBI’s work overall – setting out a negotiating position and influencing the government, but keeping up our work on the domestic priorities set out in our prosperity agenda and promoting the value of business to our communities.
First of all, members agreed that, there is a need for a new, deep partnership between government and business of all sizes from across the United Kingdom. As the source of economic growth, jobs and opportunity in the communities and regions across the UK, business now has a vital role in maintaining stability and helping the government to plot the UK’s future. Working together, we believe we must make the most of the vote to leave identifying opportunities outside of the EU whilst safeguarding the benefits of a close relationship with the EU, to build a prosperous UK economy that works for everyone.
Secondly, businesses are clear that the UK must preserve the deep economic relationship with the EU to succeed in the years ahead. Keeping UK-EU trade tariff free must be one of the highest priorities, but non-tariff barriers are equally important like maintaining the right of UK services companies – which make up 77% of the UK economy – to establish themselves and operate in EU Member States.
Third, the UK government must display its commitment to openness. We need to consider how to build a simple, clear immigration system which recognises the concerns of the public and still allows firms to attract and access the skills and talent they need. Reassurances should be made for EU citizens already in the UK and UK citizens working and residing in the EU. The government must develop a long-term strategy for international trade and economic agreements. That means maintaining preferential access to markets that we currently enjoy through EU membership, while carefully prioritising markets to make the most of any new opportunities. Click here to read CBI’s latest publication on Making a Success of Brexit – December 2016
What are the challenges and short-term implications that economiesuisse has faced since the EU Referendum? Bilateral economic relations between Switzerland and UK are of great importance â&#x20AC;&#x201C; both for UK and Swiss businesses. Brexit poses challenges to the contractual relationship with the UK that is based on arrangements of Switzerland with the EU. According to our own survey among members, Swiss businesses trading with and in the UK face significant uncertainty after the EU Referendum â&#x20AC;&#x201C; both in terms of investment as well as trade. These uncertainties are and will be deeply affected by the outcome of the UK-EU negotiation. What measures has economiesuisse taken to secure its relationship with members and to remain competitive in the post-Brexit era? Swiss businesses constantly evaluate the economic circumstances and adapt their strategies. economiesuisse is in close contact with both Swiss and UK government as well as business representatives in order to raise awareness for the importance of the bilateral economic relations and to bring in the strong and unified voice of Swiss business.
What are economiesuisse’s top priorities for the near future?
Switzerland is one of the most important trading partners of UK – and vice-versa. Bilateral negotiations on the future relationship between the two countries are therefore crucial and need to and can be initiated quickly. It is of upmost importance to avoid any divergence and deterioration regarding Swiss businesses’ market access and regulatory requirements to UK and vice-versa. The current status quo needs to be maintained – most suitable by concluding a substantial and deep free trade agreement between both parties (including services). Such an agreement should also guarantee access to qualified personnel from UK and Switzerland for businesses in both countries Additional opportunities to deepen bilateral economic ties should be used wherever possible and in both interests (e.g. regulatory environment for financial services, liberalization of rules of origin).
What does the future of Europe look like? And how does it impact economiesuisse’s business decisions? The EU and UK are crucial partners for Switzerland – and vice versa. Both potential future EU reforms as well as the Brexit need to follow the primary goal of maintaining competitiveness and innovation as well as to secure jobs and prosperity in entire Europe.
Click here to read economiesuisse’s latest “dossierpolitik” on Brexit and Switzerland (German)
What are the challenges and short-term implications that Credit Suisse has faced since the EU referendum? Credit Suisse had a Brexit contingency group in place for several months before the referendum, to enable us to deal with the immediate fallout from the Leave vote, which included some market volatility and a depreciation in the value of sterling. We were therefore well prepared for any operational risks, which did not materialise. Since then, however, we have seen some delays in financing decisions and capital market activity into Q3 as clients await spread normalisation. We have also seen a decline in trading activity due to some difficult operating conditions. In our advisory businesses, we saw a reduction in activity in the wake of the vote, but street fees picked up in Q3.
What measures has Credit Suisse taken to secure its relationship with clients and to remain competitive in the post-Brexit era? From a legal perspective, there is no change (yet) to how we deal with EU clients from our UK entities following the Leave vote in the EU referendum. The U.K. Government has so far not provided any clear indication of the final relationship they seek with the EU, which will be subject to intense negotiations for two years and likely beyond. We are therefore analysing a series of possible political outcomes, ranging from worst case (so-called Hard Brexit) to a more accommodating deal.
Whatever the final outcome, one thing is clear, and that is that banks will need a transition period to adjust from current arrangements to the future situation. Credit Suisse has a broad network of subsidiaries and branches across the EU, which gives us some optionality in terms of our planning.
What are Credit Suisse's top priorities for the near future? Credit Suisse remains fully committed to servicing our clients and delivering on our new strategy. We have indicated that approximately 20% of our UK client business derives from EU clients, and we are exploring a range of options to ensure continuity of client coverage across a number of Brexit scenarios. More broadly, we are hopeful the negotiations between the UK and the EU as well as between the UK and Switzerland conclude amicably, and that market access for financial services firms from the UK, EU and Switzerland does not materially deviate from the current arrangements. We are mindful of avoiding market disruption and a disorderly unravelling of the financial services ecosystem in London, which would risk financial stability and not be in the interests of clients. In the event the UK leaves the Single Market, we are supportive of any steps that may be taken to enhance the EUâ&#x20AC;&#x2122;s current third country equivalence process, to make it more predictable and streamlined. 55
What does the future of Europe look like? How does this impact Credit Suisseâ&#x20AC;&#x2122;s business decisions? In the short-term there is elevated political risk in Europe, following both the Brexit vote, but also in anticipation of several national elections in 2017. There is also a degree of regulatory uncertainty, but Europe is not alone in that situation. Economically, there are reasons to be optimistic â&#x20AC;&#x201C; the euro area is seeing a remarkably resilient recovery, albeit at unremarkable rates of growth. Unlike the US, it is still at an early stage of cycle, marking a sweet spot of improving corporate profitability and extremely easy monetary and financial conditions. Within the context of the group strategy, Credit Suisse remains committed to Europe, and we will continue to focus on supporting our clients as we navigate through the months and years to come.
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For Switzerland, the medium to long-term consequences of the Brexit vote remain uncertain. The negotiations with the EU are likely to prove even more difficult in the short term. The Swiss population generally sees benefits for the economy and politics.
While the short-term turbulence following the Brexit vote has largely been overcome, the potential long-term â&#x20AC;&#x201C; positive and negative â&#x20AC;&#x201C; consequences are a matter of speculation. There is considerable uncertainty in view of the need to redefine the relationship between the European Union (EU) and the United Kingdom. However, negotiations are not likely to be formally opened until 2017 and could last for several years.
The direct impact of Brexit on the Swiss economy is likely to be limited as long as there is no marked slowdown in growth in the Eurozone. Swiss exports to the United Kingdom only account for around 6% of overall exports and half consist of pharmaceuticals that are less sensitive to economic and exchange rate developments. The Swiss population canvased within the scope of the Credit Suisse Worry Barometer is optimistic and generally sees benefits for the Swiss economy. Read more Click here to read the full version of the September issue of Monitor by Credit Suisse
Source: Credit $uisse Monitor 57
What are the challenges and short-term implications of Brexit on Switzerlandâ&#x20AC;&#x2122;s financial sector? Switzerland is not an EU member and as such is not directly concerned by Brexit. There are, however, indirect effects that might take some effect over the middle and long term. Like the UK, Switzerland has some open issues with the EU; the negotiations between UK and EU will without any doubt influence the negotiations between EU and CH as well. The financial sector is already used to be in a 3 rd country situation; the banks have organised themselves accordingly a long time ago. However, any improvement of access to the EU single market would improve the situation of Swiss banks which are often very active in cross border wealth management. The SBA therefore calls for bilateral agreements with important partner countries (short term), technical equivalence in certain fields of activity (short term) and a financial services agreement (long term) with the EU.
What are the top priorities for the near future for Switzerlandâ&#x20AC;&#x2122;s financial sector? There are three top priorities: improve access to the EU market, improve the regulatory framework and create a good ecosystem for innovation in finance. Some of these areas are in common with objectives of the UK financial services industry.
What kind of (trade) relationship should be achieved between Switzerland and the UK during UK’s negotiations with the EU? The common objective – for the EU, the UK and Switzerland – should be liberal and open markets, as this boosts economic success to the benefit of all and allows for a competitive environment with regions that show a far stronger economic development. The second common objective, an appropriate regulatory frameset, could also be pursued in a co-ordinated way. Governments, regulators and central banks should exchange views, find common points and work together to make their voice heard in a better way when it comes to shaping international standards. Financial services are a global business; they will work together cross border anyway. There are many international bodies – OECD, FATF, FSB, G20, to cite only a few – where Switzerland and the UK could have a stronger impact together.
What does the future of Europe look like? The Brexit referendum has shown that the EU is in a crisis. This is underlined by the current nationalist developments in many other member states. We therefore see a strong need to reform the EU – otherwise, its political and economic development could take undesired directions .
What measures has COBCOE taken to secure its relationship with members and to remain competitive in the postBrexit era? Since the Referendum result, we have introduced the Brexit Ambition initiative. This will establish the needs of Europewide business and ensure that these needs are made known in the UK’s future trade deal negotiations. COBCOE Brexit Ambition is being driven by a dedicated task-force. This team is going to focus on research, information sharing and recommendations, and is involving members around the region. This initiative will not only strengthen our relationship with members, but also to engage the wider business community and give them a direct voice in future outcomes. What are COBCOE’s top priorities for the near future? COBCOE’s immediate priority is to ensure that the UK Government’s Brexit negotiations have a European dimension. We are working to galvanise the wider business community across Europe in order to influence the UK’s trade negotiations from the bottom up. It is essential for businesses from all countries and sectors to have a voice.
What does the future of Europe look like? We are unable to say at this stage exactly what the UK’s terms of trade with Europe will be following Brexit. The only thing we know for certain is that business and international trade will continue, despite the challenges that undoubtedly lie ahead. Business cannot wait for the negotiators to do their work and must continue to do business. We will be helping to facilitate this in the future as we have always done. New products and services are on their way to assist Whatever the outcome, Brexit needs to work for Europe as a whole, not just in the UK, because it is in everybody’s interest that Europe remains strong.
What are Dryden Associates SAâ&#x20AC;&#x2122;s top priorities for the near future?
What are the challenges and short-term implications that Dryden Associates SA has faced since the EU Referendum? Since the referendum, the only real challenge and short term implication has been the major decline of sterling against the Euro and the Swiss Franc.
What measures has Dryden Associates SA taken to remain competitive in the postBrexit era and secure its relationship with clients and suppliers? We have continued to invest in technology in Switzerland to reduce our back office costs and free up staff to increase their client facing and communication activities. From a marketing viewpoint, we are contacting UK based companies to explain the opportunities to develop their business and revenue opportunities in Switzerland and talking to Swiss companies about expanding back office activities and reducing their overall costs by developing their business in the UK.
In the near future, our top priority is to build up our presence in the UK as we believe that the relationship between Switzerland and the UK will become increasingly important to both countries. What does the future of Europe look like? And how does it Dryden Associates SAâ&#x20AC;&#x2122;s business decisions? In the medium term, it is possible that the UK (after a messy departure) and Switzerland will be viewed as extremely stable while Europe will be seen less so while it continues to go through continuing crises as a closer union is instituted. Assuming that Switzerland continues in the bilateral system with Europe and the UK rejoins the EFTA system then we see that not only will the relationship between Switzerland and the UK become increasingly important to both countries, it will provide the UK corporates with a natural European entry point while relieving many of the exchange rate pressures suffered by Swiss corporates. This would be an excellent outcome for our own business as well.
We would like to thank our members for their diverse and interesting contributions. We look forward to many more inspiring interactions and to hearing our membersâ&#x20AC;&#x2122; thoughts once Theresa May triggers Article 50. Our membersâ&#x20AC;&#x2122; involvement heavily contributes to the success and growth of the BSCC and we are proud to be able to count on your support. Thus, we are interested in listening to what Brexit means for our members and encourage them to get further involved in the BSCC Brexit project. We highly appreciate any feedback and suggestions and hope for interesting and thought-provoking discussions over the course of next year and beyond.
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Sylvia Tong – BGM Moritz Oberli – PwC
Andy Grant (deVere CH)
Dieter Varnholt – Varnholt Consulting
Julian Fougler (Freelancer)
Luke Wilde (twentyfifty)
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Katherine Gubbins – Goodness Gracious Foods Ltd
David Johnson (Halo Financial Ltd)
Serge Richards (First Names)
Ian Stewart – WheelsPlusWings Foundation
Marlies Hoecherl – Capital Law
Charles Cammiade (Freelancer)
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Vanessa Gilardi – Co-Chair of the Young Professional Group for the BSCC
For a panel of British parliamentarians and civil servants it was business as usual on Tuesday 22nd November at Westminster, meeting professionals and debating the theme that currently monopolizes the political scene – Brexit. Unravelling 40 years of long-standing political and economic ties between the UK and Europe will be a challenging divorce involving a myriad of difficult choices that will undoubtedly spark more questions than answers! The referendum was just one battle, the decisions that the British government will take in the next few years will redefine the global economic architecture of the UK and for the foreseeable future and all options are on the table.
Minister Robin Walker MP – Under Secretary of State at the Department for Exiting the European Union
Christa Markwalder, FDP & President of the National Council in 2015/16
While the decision by UK citizens to leave the EU is certainly unique, the questions underlying the future of the relationship between them bear some similarities with the ongoing political debate between Switzerland and its EU partners. Discussing common ground and possible interpretations of the current issues at hand was the theme of the debate held at the initiative of the BSCC’s Task Force Europe who had garnered a broad-ranging panel that included British and Swiss politicians supported by the Chairman of the Swiss Finance Council and two legal professionals.
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Unlike Iceland, Norway and Lichtenstein, Switzerland is not a member of the European Economic Area (EEA) but instead has forged, over decades of long hard negotiations, 120 bilateral trade treaties and currently enjoys free trade agreements with the EU. Could the Swiss model of interacting with the EU provide Brexit UK with a model way forward? The Swiss speakers noted caution here as Switzerland is not as independent as it may look from the outside, as whilst the bilateral packages do give a massive boost to the Swiss economy, they are tied up to fundamental EU principles that can be jeopardized by democratic sovereign decisions. As with EU member states, freedom of labour and free movement of people constitute the backbone of the Swiss bilateral agreement negotiated with the EU. However, it is currently under revision following a vote by the Swiss people in February 2014 to halt the immigration principle thereby casting doubt over whether the current agreements will be maintained.
Dominik Furgler, Ambassador of Switzerland to the United Kingdom chats to guests
Ironically, attracting talents through immigration is a key component of Switzerland competitiveness stability that is a very similar position held by the UK. Businesses investment remains critically embedded into three main themes: migration, education, and regulation. Many businesses in Britain and Switzerland are greatly dependent on attracting highly skilled workers and it not surprising that pressure on immigration policies will have an impact on the economy Now is not the time to be complacent. Political changes across Europe are such that it could redefine the historic principles on which the EU was founded. A shift of power between the EU institutions and other intergovernmental organizations such as the OECD might open further opportunities for non-EU outsiders. While the political environment in Switzerland and the UK are both unique in nature and do not stand simplistic comparisons, there are existing tangible opportunities to cooperate in area such as economic and trading activities. Beyond political sensitivities and ownership of sovereignty rhetoric, there is a necessity to develop viable alternatives to maintain the long-standing benefits of our relationship with Europe.
Jonathan Djanogly, MP and Magalie Chelius, Managing Director BSCC
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Founded as the European Economic Community in 1957, the European Union has rapidly established itself as a strong political and economic trading bloc comprised of 28 members. After more than 50 years, the EU may now be facing the most serious crisis of its history with Britainâ&#x20AC;&#x2122;s decision to leave. What does Brexit mean for the future of Europe? And is Brexit an indication that the jigsaw puzzle that is the EU is starting to break up into its individual pieces? The 23rd of June 2016 has already gone down as a milestone in British history. It has proved itself to be a highly polarizing topic, particularly among the generations, dividing those who remember entering the EU, or rather the EEC, and those who have reaped the benefits of being part of it. And Brexit is far from completed â&#x20AC;&#x201C; so neither is this publication. The implications and consequences of Brexit for our members, Britain, Switzerland and the rest of the world will not be clear until negotiations have been ceased and new agreements have been introduced. As Britain stands on the cusp of Brexit, wondering which path to choose, we, as members of the public or citizens of the world, must wait patiently, surveying the progress and unfolding developments.
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Our members are at the core of this publication and the BSCC is prepared to support and accompany them on this journey. Over the course of this year, this Brexit guide will be complemented with topical information and facts to provide members with helpful data, expert views and member insights. To compile a coherent and interactive publication representing our membersâ&#x20AC;&#x2122; thoughts and views on Brexit and the future, we encourage you to further engage and interact with the BSCC. Once Article 50 is triggered, the BSCC will follow up with a Brexit Barometer survey to analyze developments since the EU Referendum. We hope to have provided you with an informative and interesting brochure that serves as a guide in a period of such volatility. We would like to thank you sincerely for the contributions and insights which made this publication possible.
The BSCC Team
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The British Swiss Chamber of Commerce helps businesses grow. We are an international group, with members from many different industry sectors – backed by some of the biggest brands in Britain and Switzerland. We offer an open forum for debate, networking and access to key decision makers and influencers. We welcome companies and individuals from all sectors and nationalities. Our members come from all types of companies, big and small, established and start up. We enjoy hearing what our members are doing and welcome everyone to get involved in the everyday life of the Chamber.
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