The UK and Switzerland will continue to trade freely within the insurance sector post-Brexit, after signing a deal at the World Economic Forum in Davos today (January 25).
UK chancellor Phillip Hammond and the president of the Swiss Confederation and head of the federal department of finance, Ueli Maurer, reached the agreement which will replicate the effects of the current EU relationship with Switzerland.
It comes into force when the current EU-Swiss direct insurance agreement ceases to apply to the UK.
This is the first of a series of meetings by UK officials in order to cement closer relationships with global financial markets as the UK prepares for a future outside of the EU.
Mr Hammond, said: "The UK insurance industry contributes approximately £35bn to our economy and employs over 324,000 people.
"Links to financial industries like the Swiss insurance market are important for global financial systems and it's vital that trade continues between our two countries so firms have the certainty they need to continue to do business and invest in the UK's bright future."
Despite its relatively small population, Switzerland is one of the world’s most significant financial centres.
In 2016, Swiss investment in the UK’s financial services sector was more than £11bn, making the country one of the world’s largest investors in UK finance - second only to the USA.
The UK-Swiss direct insurance agreement, like the direct insurance agreement with the EU, allows firms to branch into each other’s jurisdiction with greater ease as a result of the mutual recognition of each other’s insurance regulations.
It will therefore ensure continuity for UK and Swiss insurers to access each other's markets both now and in the future, consistent with the terms of the original EU-Swiss agreement.
Patrick Connolly, chartered financial planner at Chase de Vere, said: "This is positive news. While Switzerland is a relatively small country it is a hugely important centre for finance and insurance sectors, which make up a significant part of the UK economy.
"However, this is only one step forwards and more challenging negotiations are ahead, as the UK tries to prepare for life outside of the European Union."
Meanwhile the Treasury committee launched an inquiry today into the future of Britain's financial services once it leaves the European Union.
The inquiry is set to examine which financial services the government should prioritise when negotiating a future relationship with the EU and third countries and how a new trading environment might benefit the sector.