Brexit can be good for Britain, says Swiss finance minister

[Deleted]

Source: https://www.ft.com/content/2354d3c0-...0-768954394623

The UK could be a “serious competitor” to Switzerland as a low-tax business location in a post-Brexit world, the Swiss finance minister has said.

The UK could “develop very positively” outside the EU, Ueli Maurer told the Financial Times in an interview. Switzerland would also benefit from Brexit by gaining an ally outside the EU but might find the UK challenging its attractive corporate tax regime, he said.

Mr Maurer also predicted the EU would have to bow to voter concerns in many countries and allow more curbs on free movement of people. While not an EU member, Switzerland abides by bloc rules that enshrine free movement.

“The free movement of people is an issue that the EU has to solve. They have to give countries more freedom, I believe, otherwise it could break up over this [issue] . . . The pressure is growing and so the EU will have to make certain concessions in favour of the member states,” he said.

Mr Maurer’s upbeat comments on Brexit contrasted with warnings by other European leaders about its potential costs and could provide comfort for Brexit supporters who regard Switzerland as a possible model for the UK outside the EU. Britain is set formally to trigger its two-year EU exit negotiations on Wednesday.

“The UK has lots of advantages and if they are used cleverly to decouple from the EU, as well as the new freedom in a good bilateral relationship, then the UK could develop very positively — I’m convinced of that,” Mr Maurer said.

Like the UK, Switzerland is strong in financial services and higher education, noted Mr Maurer, a prominent politician with the ultra-conservative Swiss People’s party (SVP). “That is perhaps the chance — that we have a partner in the same position, which on important issues is close to us.”

Since the second world war, Switzerland has attracted international businesses with special tax perks. Under pressure from other countries to end unfair practices, it agreed to move to a system under which all companies paid the same tax rates. But Swiss voters rejected the necessary legislation last month in a referendum.

Mr Maurer said Bern would rejig the tax proposals to prevent “blacklisting” by other countries. “We have to be a favourable tax location — otherwise we will be too expensive,” he said. But the Swiss finance minister noted the UK had cut corporation tax. “That worries us a little,” Mr Maurer said. “The UK could suddenly become a serious competitor.”

The UK’s main 20 per cent corporate rate compares with an average of just under 18 per cent across the 26 Swiss cantons. Philip Hammond, UK finance minister, has suggested that the country could move further towards a low-tax economic model if it did not win a favourable EU exit deal.

Mr Maurer said the UK’s room for manoeuvre would be reduced because its public debt levels were much higher than Switzerland’s. “Perhaps you [the British] cannot copy us completely but the conditions for keeping jobs in the UK and strengthening the financial centre are good — and tax is an important instrument.”

Switzerland has a web of bilateral deals governing its relations with the EU, including allowing the free movement of people. But maintaining the ties has been more difficult since 2014, when the Swiss voted for restrictions on immigration from neighbouring EU countries.

Mr Maurer said he believed Brexit would lead Brussels to become more flexible on many of its rules. “The EU cannot lose further countries, otherwise it would no longer be stable. To avoid that, there will have to be some relaxation and, mid- to long-term, Switzerland will benefit from that.”

Switzerland was only marginally affected by Europe’s migration crisis, which saw millions of people fleeing wars in places such as Syria to start new lives in Germany and other countries. But foreigners account for a quarter of Switzerland’s 8.2m population, and 300,000 commute daily across the borders with France, Germany, Italy and Austria.

Mr Maurer suggested the EU had to acknowledge concerns in member states that are stoking the rise of populist politicians such as Marine Le Pen, a leading candidate for the French presidency, or Geert Wilders in the Netherlands.

“They don’t have unlimited room for manoeuvre — that’s clear. But when they don’t do anything, then perhaps Le Pen wins in two years, or four years. The AfD [in Germany] will be stronger, Wilders in the Netherlands, Beppe Grillo in Italy . . . The opposition will simply be greater,” he said.

Worries about European political instability, exacerbated by France’s presidential election campaign, have pushed the already-strong Swiss franc even higher. In turn, that is hitting Swiss exporters. “The more instability in Europe, the stronger the franc — because the franc is a haven currency,” Mr Maurer said.

With the Swiss central bank intervening heavily in foreign exchange markets to weaken the franc, the US has put the country on its “watch list” of possible currency manipulators. Mr Maurer hopes to convince the US otherwise. “When I understand it correctly, the US feels that some countries create unfair advantages over the US. Switzerland is not doing that,” he said.

[ati87]

We have people around the world getting sick of companies avoiding paying their fair share of taxes because of loopholes and this motherf@cker wants to double down on the number of loopholes?

[Deleted]

Well, he IS a conservative afterall.

[sarahtasher]

Ah, the good old, ''X people lie all the time, it's a conspiracy, but lo and behold, this X says so, so it's a proof''

Also called the ''Wakefield adulation'' : anti vaxxers will not believe any report or study by doctors (BIG PHARMA ! KUNSPIRACY !), but will gobble like the Gospel the lone study done by Wakefield (he is a doctor !)

[Kalis]

Ah, the good old, ''X people lie all the time, it's a conspiracy, but lo and behold, this X says so, so it's a proof''

Also called the ''Wakefield adulation'' : anti vaxxers will not believe any report or study by doctors (BIG PHARMA ! KUNSPIRACY !), but will gobble like the Gospel the lone study done by Wakefield (he is a doctor !)

There is no conspiracy theory here, it is an economic viewpoint based on what Theresa May has said she might do, from a Swiss finance minister in a country that already does it.

[Kalis]

We are already a low business tax/regulation country, how low can we go?

How low you can go depends entirely on how many businesses you can attract by lowering rates, to offset the lowered revenue from existing business.

The UK has an educated workforce and decent business infrastructure, in spite of what many claim, so you could probably drop by a few points and still generate similar revenue streams to what we have now. Non-urban areas may see reduction in funding though, as infrastructure would have to go toward maintaining and improving infrastructure in cities, even more so than it does now.

Swings and roundabouts.

[Deleted]

Not they say "Brexit can be good for Britain" not "Brexit will be good for Britain" so he is unsure....

[Puupi]

It can be good, it can be bad. Who knows? *shrug*

[Kalis]

Low business tax rates has been shown to result in corporate cash hoarding, reduced investment/growth and a reduction in tax revenue to the countries coffers. Is this really what we want from brexit Britain?

Debatable, but they can also increase businesses moving to a country, start ups and employment opportunities.

As I said...swings and roundabouts. There is no magic bullet.

[Elegiac]

The EU had an incentive to give Switzerland a fairly good economic deal. Not so with the UK.

[Kalis]

The EU had an incentive to give Switzerland a fairly good economic deal. Not so with the UK.

Apart from the UK economy being significantly more important than the Swiss one.

[Deleted]

You just need to have lower corporate tax than you competitor , doesn't need to be dirt low or super high. UK is trying to have it lower than Germany and France which are the most predominant competitors after Brexit.

[Elegiac]

Apart from the UK economy being significantly more important than the Swiss one.

Considering its sole bargaining chip is its soon to be decrepit finance sector, I'd say not.

Have fun being an economic appendage of the US or China, though.

[Kalis]

Considering its sole bargaining chip is its soon to be decrepit finance sector, I'd say not.

Except it won't be. As you clearly have no idea how the financial services sector works, what you say is not really very relevant.

Have fun being an economic appendage of the US or China, though.

That does not really make any sense. We are heavily reliant on international trade now, so how will being heavily reliant on international trade in the future be any different?

[Deleted]

I thought the British already said there would be no deal that includes freedom of movement. So... the deal Switzerland has got with the EU is already out of the question. And I don't think Switzerland would be very happy if Britain got the same deal they have but without freedom of movement.

[Elegiac]

Except it won't be. As you clearly have no idea how the financial services sector works, what you say is not really very relevant.

That does not really make any sense. We are heavily reliant on international trade now, so how will being heavily reliant on international trade in the future be any different?

Largely because while part of the European bloc, you had a significant advantage in terms of actually having input into its decisions as well as greater bargaining power being buttressed by the rest of the EU.

Now, you're by definition a peripheral entity to be used and abused as the major economic powers see fit.

[Deleted]

Well that isn't so much news, I think they even suggested it themselves that they'd lower the taxation to an even lower percent to attract businesses. Issue, is that the UK already haven't been the best at collecting their taxes from a lot of foreign investors/headquarters/financial businesses, often times as low as 1 % effective taxation. That coupled with the already existing companies that would also get the same smaller taxes, the UK needed to lure something akin to 80-120 billion pound profiting industries to come into the UK, just to close the gap that they'd make by their suggested new taxation. And ultimately if the EU sees it as too much of a threat to their market, they could make regulations that make shipping over to the UK, an expensive adventure.

But I think the most important perspective is that it wouldn't help the common Brit if that situation was to pass. The business that they are keen on luring in, isn't exactly your working class jobs, far from it really, worst scenario it even further dividing the UK's population.

[Elegiac]

Well that isn't so much news, I think they even suggested it themselves that they'd lower the taxation to an even lower percent to attract business's. Issue, is that the UK already haven't been the best at collecting their taxes from a lot of foreign investors/headquarters, often times as low as 1 % effective taxation. That coupled with the already existing companies that would also get the same smaller taxes, the UK needed to lure something akin to 80-120 billion pound profiting industries to come into the UK, just to close the gap that they'd make by their suggested new taxation. And ultimately if the EU sees it as too much of a threat to their market, they could make regulations that make shipping over to the UK, an expensive adventure.

But I think the most important perspective is that it wouldn't help the common Brit if that situation was to pass. The business that they are keen on luring in, isn't exactly your working class jobs, far from it really, worst scenario it even further dividing the UK's population.

Moreover, the increasingly thin tax revenue will result in inevitable cuts to social services which will further negatively impact 'honest working class Brits'.

The only people that stand to benefit from Brexit in any sense are the already wealthy. The British working class effectively fucked itself.

[Deleted]

Moreover, the increasingly thin tax revenue will result in inevitable cuts to social services which will further negatively impact 'honest working class Brits'.

The only people that stand to benefit from Brexit in any sense are the already wealthy. The British working class effectively fucked itself.

Well there will be plenty of jobs once all the welfarre receiving, criminal and job stealing immigrants don't storm the floodgates

[Elegiac]

Well there will be plenty of jobs once all the wealth fare receiving, criminal and job stealing immigrants don't storm the floodgates

I certainly hope you're being sarcastic.