It is a leading player in finance, and it's companies are giants in life sciences and consumer goods. There were already lots of similarities between the Swiss and British economies, except that they are quite a bit richer and more successful than we are. Now we have something else in common: we have both been frozen out of the European Union’s Single Market. But hold on. Isn’t there an opportunity there as well? In truth, this would be the perfect moment to offer the Swiss a deal that would work for both sides – a common market.
The Swiss have always had a fractious relationship with the EU. It has turned down every offer to join, preferring to maintain its fierce independence, and relied instead on a huge range of deals that give it effective access to the Single Market. Over the last couple of years, the EU has been trying to consolidate that into a single agreement that would bind the country into rules and regulations imposed by Brussels that could be legally enforced. As it did with its negotiations with the UK over our departure from the bloc, however, the EU has overplayed its hand. It assumed the Swiss would come to heel. Instead, the Swiss have broken off talks, and now face the prospect of being frozen out of the EU as agreements lapse one by one.
The Swiss will no doubt survive that. It is, after all, one of the richest countries in the world (the IMF ranks it fifth in the world measured by per capita income). It can afford a setback or two. Industrial giants like Novartis and Nestle won’t notice; its banks are more interested in the global market; and its small and medium sized business are no doubt efficient enough to cope with some extra paperwork for exports. Or they can find new markets in which to operate. Even so, it will be a hassle.
Yet it may also be the opportunity for a deal. There is, after all, another big country on the periphery of the EU that has just left the Single Market and faces a fractious, difficult relationship with its largest trading partner: Britain. There is an obvious next step. The UK should make the Swiss an offer; form a common market.
How would that work? We could have completely free and open trade in all goods and services (and people as well, come to think of it, since it is hard to see anyone getting worked up about a flood of Swiss workers) with mutual recognition of each other’s standards and regulations. If you could sell a product or service in the UK then you could automatically sell it in Switzerland and vice versa. There would be no tariffs or quotas. Perhaps most importantly, regulation of the two financial markets would be completely harmonised (the four biggest financial centres in Europe, as it happens, are London, Zurich, Edinburgh and Geneva, with Paris and Frankfurt some way behind).
A Swiss-UK Common Market would have three big advantages. It would boost both economies, and compensate at least partially for the inevitable loss of trade with the EU as checks and tariffs are imposed. It would form a more significant negotiating bloc with Brussels. And, of course over time, it would form an attractive alternative to the EU for other countries to join.
The UK was always in favour of a Common Market in Europe. It just didn’t like the EU’s drift towards a single state. With the Swiss, it could finally get one.