The Financial Services Agreement between Switzerland and the UK is seen as a milestone in the post-Brexit landscape. Chris Hayward, the Policy Chairman of the City of London Corporation, sees the mutual recognition agreement as a beginning, not an end. It should be seen a model for treaties with other countries, he told finews.com

The signing of the Financial Services Agreement between Switzerland and Great Britain last year was hailed as a breakthrough. Where do we stand now?

This treaty is a unique agreement between two sovereign nations. And it's particularly good that it's Switzerland and the UK because we are the two biggest financial countries in Europe and outside of the area. It was made possible because we are both outside of the EU and both believe in open markets. In both countries there are worries about some of the protectionist tendencies around the rest of the world. Furthermore, both countries have a high quality of regulatory standards. And that's really important. Both sides gain market access for financial services. For Swiss institutions it will be initially more important for investment-based services, and for the UK there is potentially an opportunity to enter the Swiss insurance market.

Is it a balanced agreement or is the upside potential larger for one of the parties?

Any agreement of this kind is a negotiation. And a negotiation is inevitably, to some extent, a compromise. So, there's got to be enough wins on both sides of the equation to work. In Switzerland the agreement has to go before Parliament and as we understand it the ratification processes will take until later this year or early next year. In the UK the procedure is shorter, and the Financial Services and Markets Act goes into effect after a Period of 21 days after it has been submitted to Parliament for comment.

Do you expect a further deepening of the collaboration?

Our hope is that this will be the beginning, not the end, of this collaboration, and that maybe there will be opportunities to enlarge it. This is a model that not only the EU, but the rest of the world will look at and realise the potential benefits.

Switzerland has re-entered negotiations with the EU about their relationship. Will this have an effect?

I don't think the EU should see that as any sort of threat. It's just an opportunity that we have seized upon, to make it beneficial to both our countries and it shouldn't undermine any discussions with the EU. We've gone through a slow and painful process of leaving Europe. But I think we've turned that corner now. We have started discussions with the EU about financial services as well. I don't see negotiating as undermining for either country's position with the EU.

«We don't have to be in the EU to trade with the EU»

Would you say that the process of leaving the EU has come to an end?

Clearly there's a long rebuild after a divorce and this has been like a divorce. And we must rebuild trust. Trading with a strong independent United Kingdom is good for both parties. So, there are many benefits. We don't have to be in the EU to trade with the EU and to maximize benefits there as well.

How did the passporting issue affect the City of London?

London has proven remarkably resilient in financial services terms to Brexit. I personally was a Remainer, and I wanted to stay in Europe. We thought initially we would lose hundreds of thousands of jobs, due to passporting. In reality we have had job losses, but they have been significantly lower than any of the projections. And indeed, there are job gains as well. There have been EU businesses and firms who've wanted to set up an operating base in London because of Brexit. So there's been an offset.

But there has been a transfer to EU cities?

We lost some jobs through passporting, for example, to Dublin or Paris. Interestingly, there's not a lot of evidence that so much went to Frankfurt. But it has not been as damaging as we would have thought.

A lot of attention in the UK goes to the trade in goods and the position of the industry. Are services neglected?

I am keen to encourage the UK government to flip on trade policy towards the services economy. 85 percent of our jobs come from services, and yet our trade policy doesn't recognise that it's still semi-focussed on manufacturing. I'm not saying we shouldn't have manufacturing trade policy—of course we should. But we need to balance it out better. Any split of this magnitude is constitutional and clearly has an impact. But we've weathered the storm pretty well.

There will be a general election in the UK sometime this year. What would you expect from a change in government to the Labour Party?

That is a possibility, if the polls are to be believed. The City of London Corporation is an impartial organization. We are genuinely independent and genuinely interested in speaking for and competing on behalf of the sector. The Labour Party has just published their financial services review. And to that we provided input, as we would to any political party. I get the impression that Labour sees the financial services rather as part of the solution than as part of the problem.

«Labour government will be business friendly»

Whoever comes to power will have to deal first and foremost with the budget restraints. The key challenge is how to achieve economic growth. And we've come forward with a very visionary set of proposals on economic growth, which we've lobbied on. What the country will need to get growth is a strong public private sector partnership. If they do what they say they’ll do, a Labour government will be business friendly, I think. I've had discussions with the Labour treasury team, and they are very positive about the City. I think they see that this is the way to move. If we don't get growth, we don't get new jobs, we don't get new businesses, and we don't get new tax receipts to pay for the public services.

The square mile has changed a lot, and firms are moving back from Canary Wharf. What are the reasons? 

When the banks moved to Canary Wharf, 15 or 20 years ago, it was largely because our planning policies didn't allow tall buildings. They could not have the size of offices they wanted. That has changed and there are eleven new high-rise buildings in the planning stage. I've been very instrumental in leading the return of some of those businesses to the City. Firms like HSBC or Clifford Chance moved back, and we are in discussions with others. But not only from the east but also from the west, like hedge funds in Mayfair, for example. I think we're poised for a renaissance of the City of London.

After office hours or at weekends the city used to be a vast empty space. How did that change?

We have a much younger working demographic in the City and they want to work and play in the same place. Now we have a thriving night-time economy. Two years ago, we launched a flagship policy called «Destination City», which reimagines the city as a place not just for business, but to bring tourism into it as well. During Covid we did support a lot of small businesses, like coffee shops or sandwich bars, to keep them going. We've been working on a revitalisation; a more dynamic, a more modern City of London.

Chris Hayward was first elected to Common Council of the City of London Corporation in 2013 and served as Chairman of the City Corporation’s Planning & Transportation Committee and as Sheriff of the City of London from 2019-2021. In May 2022 he was elected Policy Chairman.
He engaged in British politics at both the local and national level since early adulthood and has founded, led, and expanded companies across the UK and globally in a range of industries. Hayward continues to serve as a Non-Executive Director working with companies focused on property, infrastructure, civil-engineering, and planning.