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After the Brexit is before the …
June 27, 2016

After the Brexit is before the …

Brexit is a large-scale experiment with open-ended ramifications. We Swiss must recognise this as an opportunity instead of mourning the past. According to Stefan Hoffmann, however, there will not be a fundamental shift in the importance of the various international financial centres.

The British have reached their decision: they will leave the EU. We are witness to a large-scale experiment, and no one can predict just how it will unfold due to the complexity of the matter. So what does all this mean for Switzerland and its financial centre? Uncertainty and instability have increased, the markets are more volatile, and the convictions of supporters on both sides would appear to have strengthened rather than weakened. Many people feel vindicated – some in their hopes, others in their fears; and the result is that they are arguing even louder than before and listening even less. And in the meantime, no consensus is emerging as to which options should be pursued, neither on the side of the proponents, nor among those opposed to Brexit.

Seeing the opportunities

We as Swiss citizens should above all recognise this as an opportunity both for us and for the whole, and not mourn the past: what was once at an impasse will now begin to move towards resolution, what was once blocked will now disentangle itself. The status quo of the Switzerland – EU relationship is no longer an option. Neither can the EU go on about its business as if nothing had happened. And it won’t. The Brexit calls a lot of things into question that to date were sacrosanct, perhaps even the “absolute” free movement of persons. We should not underestimate the fact that the EU’s readiness to learn can be to our own advantage. At least not as long as there is no proof to the contrary. But we will need to be patient, because Switzerland is now even less the navel of the EU. That being said, perhaps our country will soon become a welcome experimental ground for new and better things. Our chief negotiators should have the courage to reach new shores and question the familiar and the seemingly obvious; they will require imagination and self-confidence to this end. The latter, however, can only take root if we trust in our country’s government and our citizens. There is no football team in the world that can score the type of goal that the team’s own fans are not convinced they are capable of scoring…

Relative importance of financial centres will remain intact

London’s position as a global financial centre is impacted by Brexit. Some of the concerns are probably exaggerated. London is not first and foremost the EU’s financial centre, instead, together with New York, it is the global financial centre. The biggest danger for London would be swelling protectionism. But this is a danger for all economies, both big and small – even those that see protectionism as a possible remedy. So what about the Swiss financial centre? With Post-Brexit London, we will gain a competitor who will probably be even more like-minded than before. The London financial centre will have to re-invent itself in certain areas. We can learn from this and we can contribute intellectual inspiration and political support. The banks in Switzerland could most likely come out the biggest winners in the wealth management segment, an area where they already hold a strong position. They would benefit from their expertise and reputation, but also from Switzerland’s status as a safe haven. However, the potential should not be over-estimated. For a number of types of banking activities, it would make little sense to shift the business from the UK, which is no longer an EU member, to Switzerland, which is not an EU country. Another issue is that Switzerland’s future relationship with the EU remains unclear, in particular in light of the future implementation of the mass immigration initiative, and therefore the bilateral agreements. And finally, London and Zurich simply do not play in the same league. Or to rephrase it in football terms: even if FC Barcelona were for some reason in a weaker position as a team, that would not be likely to mean that FC Basel would take home the Champions League cup…