London

The City after Brexit

London remains the only financial centre in Europe that competes with New York across the whole range of wholesale finance. Its foreign exchange and derivatives markets, its insurance market around Lloyd’s, its concentration of asset managers and hedge funds and its legal and accounting professions form a cluster that no continental city has been able to reproduce. Brexit, which took effect at the end of 2020, deprived British firms of the European passport and forced banks and investment firms to move staff, capital and legal entities to Dublin, Frankfurt, Paris, Amsterdam and Luxembourg. The damage to London’s position has nonetheless been slower and less dramatic than many predicted in 2016, although it is visible in the loss of euro-denominated share trading to Amsterdam and in the decline of the London equity market.

The equity market is London’s most conspicuous weakness. In the first half of 2025 the combined proceeds of initial public offerings and follow-on offerings in London amounted to GBP 8.8 billion, the weakest inflation-adjusted total in three decades, and only three companies listed on the main market in the first eight months of the year.¹ The Financial Conduct Authority (FCA) responded with the most far-reaching reform of the listing rules in a generation. With effect from 29 July 2024 it replaced the premium and standard segments with a single category for equity shares in commercial companies, abolished shareholder votes on significant transactions and relaxed the eligibility requirements, including the track record of three years.² For Zurich, the lesson of the London experience is that a deep capital market does not protect a centre from the migration of issuers to New York once valuations and investor bases diverge. The SIX Swiss Exchange faces the same pressure on a smaller scale.

English law and legal services

London’s most durable advantage lies in English law and in the legal profession that applies it. English law is the preferred choice for cross-border contracts, and TheCityUK estimates that it underpins about 40 per cent of global corporate arbitrations. In 2024 the legal services sector of the United Kingdom generated revenues of GBP 52.3 billion and a trade surplus of GBP 8.9 billion. Seventy-two per cent of the cases before the Commercial Court in London involved at least one international party.³ These figures describe an export industry that Switzerland cannot match in scale. Swiss law and the arbitral seats of Zurich and Geneva have a long tradition in international commercial arbitration, which Part I traces. Yet the Swiss Code of Obligations is rarely chosen for financial contracts, which are drafted under English or New York law almost everywhere in the world, including in Zurich.

The Zurich response has been to make its courts accessible to international parties. The revised Swiss Civil Procedure Code, in force since 1 January 2025, allows the cantons to conduct proceedings before international commercial courts in English at the request of the parties. The canton of Zurich has announced its intention to create a Zurich International Commercial Court as a specialised chamber of the existing Commercial Court and published a draft amendment in July 2025, with Bern and Geneva pursuing similar projects.⁴ The chapter on the Zurich Commercial Court in Part I describes this reform in detail. The new chamber can offer foreign parties who choose Zurich as a forum an English-language procedure before judges with commercial experience, at costs that remain well below those of the London courts. The dominance of English law in financial contracts will remain untouched by it.

The end of the non-dom regime

A second development in London concerns private clients directly. With effect from 6 April 2025 the United Kingdom abolished the remittance basis of taxation for individuals not domiciled in the country and replaced it with a residence-based system. New arrivals now receive full relief on foreign income and gains for their first four years of tax residence, provided they had not been resident in the preceding ten years. Liability to inheritance tax on non-British assets now attaches to individuals who have been resident for at least ten of the previous twenty tax years and continues for up to ten years after their departure.⁵ The reform ended a regime that had made London attractive to wealthy foreigners for more than two centuries. It has been followed by reports of a large outflow of wealthy individuals from the United Kingdom. The Henley Private Wealth Migration Report 2025 projected a net loss of 16,500 millionaires for the United Kingdom in 2025, the largest of any country, and a net gain of 9,800 for the United Arab Emirates.⁶ These projections should be treated with reserve. The Tax Justice Network has criticised the underlying data because they are derived from social media profiles and small samples of very wealthy individuals and because annual migration rates of millionaires remain far below one per cent.⁷

For Zurich the end of the non-dom regime is an opportunity of limited size. Some of the families leaving London move to Switzerland, where the cantonal lump-sum taxation still exists in many cantons, although the canton of Zurich abolished it by popular vote in 2009. Others choose Milan, Dubai or Monaco. The flows are more important for the Swiss financial centre as a whole than for the city of Zurich, because the lump-sum regime draws families to the cantons of Schwyz, Zug, Vaud, Valais and Ticino, while their assets are often managed by banks and asset managers in Zurich and Geneva.

The Berne Financial Services Agreement

For the relationship between Zurich and London, the most important development of recent years has been the Berne Financial Services Agreement (BFSA). Federal Councillor Karin Keller-Sutter and the Chancellor of the Exchequer Jeremy Hunt signed it in Berne on 21 December 2023. The Federal Department of Finance described it as the first agreement in which two states reciprocally recognise the equivalence of their legal and regulatory frameworks in specific sectors of financial services to facilitate market access. The sectors covered are banking, investment services, insurance limited to non-life business with large corporate clients, asset management and financial market infrastructures.⁸ The agreement entered into force on 1 January 2026. FINMA, the FCA and the Prudential Regulation Authority of the Bank of England concluded a memorandum of understanding on supervisory cooperation, and Swiss firms notify their cross-border activity through FINMA’s survey and application platform.⁹

The practical significance of the agreement lies in private banking and asset management. Swiss banks and portfolio managers may serve high-net-worth individuals in the United Kingdom across the border without a British licence, provided the client holds eligible assets of at least CHF 2 million and asks to be treated as a professional client. Retail clients remain excluded, and a Swiss firm may not rely on the agreement to open a branch.¹⁰ The agreement thus gives Zurich privileged access to the wealthiest segment of the British market at a moment when the European Union is moving in the opposite direction. The chapter on private banking in Part H analyses the conditions in detail. From the perspective of international competition, the agreement is also a political signal. Two states outside the European Union have shown that outcome-based mutual recognition is possible between jurisdictions with comparable standards, and the model may serve as a template for future Swiss negotiations with other partners.

Notes

1. Enterprise, “London’s IPO drought deepens as Frankfurt, Zurich pull ahead”, 29 August 2025, https://enterpriseam.com/uae/2025/08/29/londons-ipo-drought-deepens-as-frankfurt-zurich-pull-ahead/, citing the Financial Times and Reuters. The article contrasts the London figures with planned listings in Germany and with the listing of the Swiss Marketplace Group in Zurich. ↩
2. CMS, “FCA overhauls the UK listing regime as part of the most ambitious listing rule reform in recent years”, https://cms.law/en/gbr/legal-updates/fca-overhauls-the-uk-listing-regime-as-part-of-the-most-ambitious-listing-rule-reform-in-recent-years2. The reform also permits enhanced voting rights for founders and pre-IPO investors for ten years after admission. ↩
3. TheCityUK, “UK legal services deliver record economic contribution and re-enforce global influence”, 9 December 2025, https://www.thecityuk.com/news/uk-legal-services-deliver-record-economic-contribution-and-re-enforce-global-influence/. ↩
4. Baker McKenzie, Global Litigation News, “Switzerland steps up: international commercial courts will strengthen Switzerland as hub for the resolution of international commercial disputes”, 26 August 2025, https://globallitigationnews.bakermckenzie.com/2025/08/26/switzerland-steps-up-international-commercial-courts-will-strengthen-switzerland-as-hub-for-the-resolution-of-international-commercial-disputes/. The access conditions proposed include a commercial activity of at least one party, a minimum value of CHF 100,000, the express consent of the parties and a foreign domicile or seat of at least one of them. ↩
5. ACCA, “Non dom tax regime abolished”, October 2024, https://www.accaglobal.com/gb/en/technical-activities/technical-resources-search/2024/October/Non-dom-tax-regime-abolished.html. Former users of the remittance basis may repatriate earlier foreign income and gains at reduced rates of 12 and later 15 per cent under a temporary repatriation facility. ↩
6. Business Standard, “Millionaire migration 2025: UAE, US top destinations; UK sees biggest wealth exit”, 25 June 2025, https://www.business-standard.com/world-news/millionaire-migration-2025-uae-us-top-destinations-uk-wealth-exit-125062500811_1.html, reporting on the Henley Private Wealth Migration Report 2025. ↩
7. Tax Justice Network, The millionaire exodus myth: A critical reconsideration of the Henley & Partners Private Wealth Migration report, June 2025, https://taxjustice.net/wp-content/uploads/2025/06/The-millionaire-exodus-myth-A-critical-reconsideration-of-the-Henley-Partners-Private-Wealth-Migration-report-June2025.pdf. According to the paper, the reports rely largely on work locations stated on LinkedIn and similar platforms and extrapolate from a small number of observed changes. ↩
8. Federal Department of Finance, “Switzerland and the UK sign agreement on mutual recognition in financial services”, 21 December 2023, https://www.efd.admin.ch/efd/en/home/the-fdf/nsb-news_list.msg-id-99533.html. Keller-Sutter is quoted as saying that the agreement “helps to retain and boost the international competitiveness of the Swiss financial centre in the long term”. ↩
9. FINMA, “Berne Financial Services Agreement”, https://www.finma.ch/en/documentation/legal-basis/international-treaties/berne-financial-services-agreement/. ↩
10. VISCHER, “London calling: financial services agreement between Switzerland and the United Kingdom to enter into force (Part 1)”, https://www.vischer.com/know-how/blog/london-calling-financial-services-agreement-between-switzerland-and-the-united-kingdom-to-enter-into-force-part-1. The authors distinguish these clients from high-net-worth individuals with assets of at least CHF 500,000 and relevant knowledge, who fall outside the exemption. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.