Updated : Switzerland faces the threat of financial sanctions from the EU after failing on Friday to endorse a deal aligning the small Alpine nation more closely with the bloc.
In a decision which could have ramifications for the UK post-Brexit, the seven-strong Swiss federal council, or cabinet, declined to formally agree a proposed new “institutional framework” governing EU trading relations with Switzerland, a non-EU member.
Instead, Bern announced it would launch a “consultation” across Switzerland lasting until next spring.
Brussels has served a stark ultimatum to Switzerland on trade, warning that its stock exchanges will be cut off from EU traders unless Bern on Friday explicitly approves a new framework for relations with the bloc.
The threat of reprisals sets the stage for a make-or-break meeting of Switzerland’s seven-member federal council, or cabinet, after a decade of meandering negotiations to more tightly align the country with the EU’s regulatory system.
The tactics used by Brussels are being closely watched by the City of London as a dry run for talks with Britain after Brexit, where “equivalence” assessments for financial services access could be used as a political weapon in broader trade negotiations.