Chancellor Jeremy Hunt has signed a deal which he said will make it easier for UK and Swiss financial firms to deal with each other.

Trade in financial services between the UK and Switzerland is worth more £3bn.

The new Berne Financial Services Agreement means that Switzerland and the UK will recognise and accept each other’s regulations.

“We’re opening each other’s markets up to the other in way that will boost competition and choice,” Mr Hunt said.

The chancellor insisted that the agreement was only made possible by the UK being outside the EU.

The “new type” of agreement moves away from “aligning legal structures” that can be used as a template for future deals, Mr Hunt said.

Under the agreement “firms based in the UK will be able to serve Swiss clients while largely relying on familiar UK firms and vice versa for Swiss firms”.

Firms working in “asset management, wholesale insurance, banking markets” will see the greatest benefit, Mr Hunt said.

Negotiations have been under way since June 2020 when Prime Minister Rishi Sunak was chancellor.

The bosses of British finance firms have welcomed the fact that the deal is “dynamic”, which means that the relationship will evolve as regulation in both markets changes over time.

Switzerland is home to over $2 trillion in wealth controlled by some of the world’s richest people. It is also a major centre for insurance and re-insurance – which is how insurance companies insure themselves against abnormally large or catastrophic losses.

This is also a key strength of London which is home to Lloyd’s, which is the world’s largest insurance market.

Mr Hunt said, “this kind of agreement plays to UK’s strength”.

He admitted the change will help only in a “modest way” but it “sends a signal that UK as a financial centre is motoring,” he added.

The BBC understands that getting agreement from the insurance industries in both countries was the trickiest part of the deal.

It is the UK’s third largest non-EU trading partner after the US and China.

Finance chiefs in the UK hope that the Swiss deal will form a model for agreements with other major financial centres – with Singapore mentioned by several people contacted by the BBC.

London’s position as the pre-eminent European financial centre has been dented in recent years as trading in shares of European companies has moved to European exchanges including Paris and Amsterdam.

It has also seen a number of high-profile UK based companies, including ARM Holdings, move their primary stock market listing to New York.

Meanwhile, Switzerland has seen the collapse of Credit Suisse, one of its biggest and oldest banks.

The signing will provide some cheer for both sides when Mr Hunt and his counterpart Karin Keller Sutter meet on Thursday.

Separate to this financial services agreement, the UK is also currently negotiating a deeper and wider free trade agreement with Switzerland.

In the wake of the UK’s exit from the EU, the government has been trying to overhaul financial regulation to improve London’s attractiveness in comparison with other European rivals.

Just over a year ago, Mr Hunt announced the so-called Edinburgh Reforms – 31 measures that included plans to scrap a cap on bankers’ bonuses and allowing insurance companies to invest in long-term assets such as housing and windfarms.

However, the chair of the Treasury Select Committee, Harriet Baldwin, has described the measures as “a damp squib”.