#Brexit and the Swiss Model

I have been bemused and frustrated in equal measure watching the #brexit debate descend into farce and acrimony over the misuse of various options available to the UK in the event of a decision to leave the EU in the coming weeks.

One model repeatedly proposed is the famous “Swiss Model” — participation in the EEA but keeping the EU politically at arms length. At least, that is how it is pitched by leave.eu from their 10,000ft view of these things.

Having lived in Switzerland for the past two years, I cannot consider myself a specialist in all things Swiss, but certainly have a few views and a few key points need to be highlighted.

1. the Swiss pay (generously) into the EU in order to participate in the EEA.
2. they have to adhere to all EU regulations in order to trade, despite not participating in defining those regulations
3. they needed over 120 bilateral agreements to get to where they are (and many services such as banking are excluded)
4. the 2014 referendum to limit immigration from the EU (e.g. dropping freedom of movement) has kicked off a mere “taste” of what will happen to the UK if the vote for #brexit comes to fruition

The Swiss are seen from the outside with some envy for the perceived quality of life, purchasing power, high tech engineering, great universities, low taxes and healthy trading industries. These are all (relatively) fair judgements to make of this beautiful country of lakes and mountains (and not a little chocolate).

Since the 2014 referendum however, they have had to dig deep to pay to participate in Erasmus+, and industry has had to wait patiently whilst the EU refuse to negotiate until post UK referendum.

Also, it is worth remembering the basis of the “Swiss miracle”. Switzerland was a very poor country until WWI and in particular after WWII. It was in opening borders, trading freely, and vigorously signing bilateral agreements that they saw the growth in high tech manufacturing and global pharmaceutical giants. These were of course given a kickstart by having survived WWI intact being virtually the only ones left standing whilst the rest of Europe rebuilt itself. There is also the small fact of the “grey banking sector” under which private banking and wealth management flourished.

Through a combination of opening banking secrecy rules and the referendum to break freedom of movement with the EU, we are only just starting to see this unravel (with capital under management outflows increasing and banking margins dropping already).

So circling back to the UK referendum on the EU, what does this all mean? Well, it is certainly tempting to look on and wonder what could be in the UK, however things are not quite plain sailing, and the UK is not starting in the same position as the Swiss, who are only just starting on their journey in renegotiating their existance alongside the EU.

Caveat emptor, voters…