The City of London is hoping for a Swiss-style deal with the European Union to preserve its status as one of the world's top financial centers. The former president of Switzerland's central bank gave those hopes a reality check.
Philipp Hildebrand was the penultimate Bern insider as head of Switzerland's central bank until his fall from grace four years ago. He is now based in London as a vice-chairman of asset manager Blackrock.
This puts him in a rare position in London, which is grappling with how to keep access to the European market following a popular vote to leave the union, to illustrate the way forward.
Tough Talk
Instead, he administered tough talk at a «Financial Times» annual event in London: no membership, no voice.
«We [Switzerland] have not been able in any way to regain any sovereignty on immigration. And we have no financial services agreement, despite the fact that we’ve negotiated for 10 years. Don’t believe that you’ll get anything else,» Hildebrand said.
«Passporting»
One key concern for London is losing major international banks like J.P. Morgan, Goldman Sachs and Citigroup who use the U.K. to «passport» into the European market – the same practice that UBS and Credit Suisse use.
«If sovereignty on immigration is the anchor of the government’s strategy, and that’s what you want as the British people, then you have to accept that you will not get passporting, you will not get a financial services agreement. You can get, with skillful negotiation, pretty much open physical trade. But the financial side will be very difficult.»
«Britzerland» Deal
«Very difficult» is bureaucratic jargon for nearly impossible and years in the making, if at all.
Hildebrand's comments highlight the divide between trading goods versus exporting services such as banking, insurance and money management. Britain's economy is highly reliant on the latter, and heavily concentrated on the City of London.
His views stand in direct contrast to the plans of some Brexiteers for a British deal modeled after Switzerland's trade with the EU – dubbed «Britzerland» by pundits.
No Financial Services Deal
Switzerland's and the EU's relationship is governed by hundreds of bilateral deals which have taken decades to hammer out.
While Brexit has imperiled Britain's economic prospects, Switzerland never was a member of the bloc and has struck a series of deals over everything from power supply to exchange students. Bern's attempts to reach a blanket EU deal for financial services, however, have foundered.
Hildebrand has been an outspoken advocate of rehabilitating Europe's banks and for fiscal reforms, but has until now not been particularly vocal on British politics or policy.
