Member Article

Five things Brexit Britain can learn from Switzerland

As seen through the lens of Javad Marandi, a Swiss-based British entrepreneur

In the wake of Britain’s Brexit vote last year, Switzerland is among the models the UK will look to as it strives to forge a meaningful trade relationship with the European Union.

As it negotiates this delicate and complex exit, British policymakers would do well to scrutinise the UK’s domestic policies too – and should take notes from Switzerland as a prosperous non-EU member which commands one of the world’s most sophisticated economies.

Having invested in multiple European markets for 20 years, I know first-hand which factors create a favourable environment for inward investment. Here are some of my thoughts on valuable lessons Brexit Britain should take from the Swiss.

Investment in infrastructure

The 57-kilometre Gotthard Base, the world’s longest tunnel which opened last year, is part of the New Transalpine Project (NEAT) which aims to facilitate railway transit through the Alps from the North to South. Powered by the Swiss ABB Group, it’s a marvel of engineering. The Swiss government also has further plans to implement a national road and agglomeration transport fund (NAF) from 2018 onwards, increasing investments by 26 per cent next year.

Progress here can be seen in the UK. Despite setbacks, HS2 promises to be the backbone of the modern British rail network, while the £23 billion National Productivity Investment Fund announced last autumn will offer more than £2.6 billion to improve transport networks, as well as a multi-million pound package to accelerate the future of broadband. However, the British government should look to the Swiss for confidence in infrastructure spending.

Focus on innovation

Topping the Global Innovation Index in 2015, Switzerland offers fertile ground to launch, grow and develop cutting-edge companies. The Swiss capacity for innovation influences all areas of its economy, most notably those driven by technological developments, which has opened the door to countless opportunities for foreign investors.

Switzerland invests almost three percent of GDP in research and development, has the highest per-capita global spend on IT products, and files more technology patent applications per head than any other country. Better still, the Geneva-based CERN, the European Organization for Nuclear Research, offers business opportunities in the region of £160 million per year.

The UK government has promised an additional £4.7 billion of investment in innovation up to 2020 and should maintain this commitment. Prime Minister Theresa May recently described the technology sector as a “great British success story” following reports that the UK has attracted £28bn in technology investment since 2011, compared with £11bn in France and £9.3bn in Germany.

Open attitude to trade

Despite being a landlocked country with scarce natural resources, Switzerland stands proudly as one the world’s foremost trading nations – with exports accounting for in excess of 60 per cent of GDP. Since rejecting EU membership, it has agreed a web of more than 120 bilateral contracts governing economic and trading relations. Its current network spans 28 free trade agreements, with 38 partners outside the EU including China, and seven further agreements in negotiation.

Britain must seek to emulate this, first reaching agreements with the EU, and then looking beyond this to gain access to foreign markets hungry for the services it excels at selling, such as banking, accountancy and insurance, which have enormous potential for growth in Asia.

Protection of foreign investment

Switzerland has signed many investment protection treaties, of which 112 are in force. Most importantly, it has not been involved in any major international disagreement concerning foreign investment in the recent past because of its transparent and liberal foreign investment policy.

Highly-qualified workforce

Switzerland provides a world class education system and unrivalled technical training opportunities. This is evidenced by the country’s low unemployment rate, which stood at 3.1 per cent last July and remains comfortably below 3.5 per cent according to the State Secretariat for Economic Affairs.

The existing bilateral agreement with the European Union allowing the free movement of people has increased the number of highly-skilled jobs in the country. Britain should continue to recognise the value this brings to the UK economy.

Ultimately, Britain is a fantastic place to start and grow businesses. However, the government will need to work hard to maintain these excellent investment conditions throughout the Brexit process and beyond. It is difficult to make direct comparisons between the UK and Switzerland – Britain’s population is almost eight times larger – but the small Alpine nation does provide some valuable lessons on areas of domestic policy to prioritise for a prosperous future.

This was posted in Bdaily's Members' News section by Javad Marandi .