UK Chancellor Jeremy Hunt is set to sign a pivotal financial services agreement with Switzerland on Thursday, signalling a significant boost in economic relations between the two nations. This deal, focusing on the mutual recognition of regulatory regimes, is designed to bolster the City of London’s stature in the global market following the UK’s exit from the European Union, reported the Financial Times.

The UK-Swiss agreement, which simplifies the operations for financial firms and affluent clients in both countries, is a testament to the UK’s newfound ability to negotiate independent deals post-Brexit. The Treasury highlighted that such an agreement was made possible due to the UK’s departure from the EU, allowing for more flexibility in its international economic engagements. During his visit to Bern, Chancellor Hunt is expected to underscore this point, showcasing the deal as a prime example of Brexit’s benefits in forging alliances with major financial centres.

Open and free economy

Negotiations for this landmark deal were initiated in 2020 by then-Chancellor Rishi Sunak, who envisioned it as a reflection of a shared commitment to an “open, global and free” economy. The agreement, particularly favourable for the insurance sector, is set to facilitate trade between specialist markets in both countries, such as Lloyd’s of London and major Swiss insurance groups like Zurich and Swiss Re.

The deal has been well-received by industry experts and analysts. David Henig, UK Director at the European Centre for International Political Economy, described the agreement as “broadly good news,” leveraging the UK’s global influence in financial services. He even suggested that the benefits of this agreement could surpass those offered by regulatory “equivalence” deals the UK would have had as an EU member.

A notable aspect of the agreement is its potential impact on the insurance sector. It is expected to exempt London-based insurance brokers from stringent regulations, allowing them to avoid setting up branches in Switzerland, thus reducing operational costs and complexities.

The trade between the UK and Switzerland, particularly in financial and insurance services, has seen a substantial growth of 53% from 2016 to 2022, amounting to £3.28 billion in 2022. Moreover, the UK is ambitiously pursuing an enhanced trade agreement with Switzerland, which would cover a broader spectrum of trade activities.

This article first appeared on Invezz.com