Guidance

UK-Switzerland enhanced Free Trade Agreement: technical note

Published 13 July 2026

1. Introduction

The United Kingdom and Switzerland have concluded negotiations on an enhanced Free Trade Agreement (FTA). This builds on the existing UK-Switzerland FTA which came into force in 2021.

This technical note sets out the Department for Business and Trade’s (DBT) headline results of the economic impact of the enhanced UK-Switzerland FTA. It presents modelled estimates of the change in services trade flows between the UK and Switzerland as a result of the enhanced FTA.

In addition, the UK and Switzerland have agreed to put the existing Services Mobility Agreement (SMA) on a permanent footing as part of the FTA. This note also sets out modelled estimates of the avoided loss of services trade from agreeing this deal.

The results are not a full and holistic assessment of the impacts of the enhanced FTA. They are a preliminary assessment to provide an initial understanding of the general magnitude and direction of the impacts on services trade of the enhanced agreement.

The department will publish a more detailed assessment of the impacts of the enhanced UK-Switzerland FTA following signature.

2. Preliminary modelling results

These preliminary results are not forecasts. They represent the marginal economic impacts of the agreement compared with a counterfactual without the enhanced FTA, while maintaining all other factors affecting the UK-Switzerland economic relationship constant.

A comparative static model is used which means that a comparison can be made of the economy before and after the introduction of the agreement, focusing on the long-term impact. The results therefore represent the change in the long-run level of trade flows, each year, relative to a baseline of 2019 trade levels.

To estimate these figures, the analysis uses a sectoral simulation gravity model known as the New Quantitative Trade Model (NQTM). For more details, read the NQTM modelling paper used in the upgraded UK-Republic of Korea FTA. This builds on DBT’s existing Services Gravity Modelling as set out in a 2021 Services trade modelling working paper.

The model is based on a framework developed by Caliendo and Parro, using International Trade and Production Database for Simulation (ITPDS) trade data and Centre for Prospective Studies and International Information (CEPII) tariff data aggregated from the Harmonised System 6 (HS6) level.^{[footnote 1]} A working paper setting out the model in full will be published in due course.

The model does not have an explicit time dimension. However, the results are assumed to reflect long-run impacts given the effects of removing trade barriers take time to feed through the economy. The model does not provide results in pound sterling (£) values and instead outputs results as percentage changes in trade and as US dollar values in 2019 prices. To obtain pound sterling (£) values in 2025 prices, the percentage change in trade is applied to 2025 services trade data published by the Office for National Statistics (ONS).^{[footnote 2]}

Results should be interpreted as broad orders of magnitude rather than precise estimates.

2.1 Modelled estimates of the impact on bilateral services trade from the enhanced FTA

The preliminary estimates for bilateral services trade from the enhanced FTA are modelled increases compared with their current level, expressed in 2025 prices. This provides an indication of the overall picture of services trade with Switzerland after the enhanced FTA.

Table 1 shows modelled estimates of the change in trade flows between the UK and Switzerland as a result of the enhanced FTA.

Modelling estimates that bilateral services trade with Switzerland could increase by around £7.2 billion (25%) per year in the long run as a result of the enhanced FTA.

Table 1: Bilateral change in services trade from the enhanced FTA

	£ billion estimates (in 2025 prices)	Percentage change (%)
Change in UK services exports to Switzerland	£5.2 billion increase	26% increase
Change in UK services imports from Switzerland	£2.0 billion increase	23% increase
Change in total services trade between the UK and Switzerland	£7.2 billion increase	25% increase

Source: DBT Modelling

UK services exports to Switzerland could increase by £5.2 billion (26%) per year in the long run as a result of the enhanced FTA.

UK services imports from Switzerland could increase by £2.0 billion (23%) per year in the long run as a result of the enhanced FTA.

2.2 Modelled estimates from placing the temporary Services Mobility Agreement (SMA) on a permanent footing

The SMA allows UK professionals to work in Switzerland for up to 90 days without a work permit. Without the enhanced FTA, the UK would have lost access to these commitments (due to expire in 2029), which may have resulted in a fall in services trade between the UK and Switzerland.

Table 2 shows modelled estimates for the avoided fall in services trade from maintaining access to the commitments within the SMA. The methodology is the same as that used for assessing the enhanced FTA.

These results are not additive with estimates for the enhanced FTA. The modelling of the enhanced FTA assesses the additional benefits above the counterfactual. Maintaining the commitments of the SMA is not creating new trade but ensuring the UK maintains the status quo and avoids a potential fall in services trade with Switzerland.

Modelling estimates suggest that making the SMA commitments permanent could prevent a fall in bilateral services trade with Switzerland by around £1.3 billion (4%) per year in the long run.

Table 2: Bilateral change in services trade if the SMA were to expire and not be replaced with permanent FTA commitments

	£ billion estimates (in 2025 prices)	Percentage change (%)
Change in UK services exports to Switzerland	£0.7 billion decrease	4% decrease
Change in UK services imports from Switzerland	£0.6 billion decrease	5% decrease
Change in total services trade between the UK and Switzerland	£1.3 billion decrease	4% decrease

Source: DBT Modelling

Modelling estimates suggest that making the SMA commitments permanent could prevent a fall in services exports to Switzerland by around £0.7 billion (4%) per year in the long run.

Modelling estimates suggest that making the SMA commitments permanent could prevent a fall in services imports from Switzerland by around £0.6 billion (5%) per year in the long run.

3. Model description

3.1 New Quantitative Trade Model (NQTM)

The impact on bilateral trade from the enhanced UK-Switzerland FTA is modelled using an approach developed by Caliendo and Parro.^{[footnote 3]} This model is referred to as the NQTM, which extends DBT’s existing Services Gravity Modelling as set out in a 2021 Services trade modelling working paper.

For more details, read the NQTM modelling paper used in the upgraded UK-Republic of Korea FTA.

The interpretation of the results

The NQTM modelling is a representation of the world built on past data that may not represent what happens in the future, particularly at a time of trade policy uncertainty. The estimated preliminary results are not forecasts, they represent the marginal economic impacts of the agreement compared with a counterfactual of 2019 trade levels, maintaining all other factors affecting the UK-Switzerland economic relationship constant. Therefore, while this modelling provides insights on the expected orders of magnitude of the economic impacts, it does not capture all possible factors affecting the future trading relationship between the UK and Switzerland. For example, it does not capture the impact of recent tariff announcements by the United States of America (USA) on both countries.

No economic model can fully capture the complexity of the real-world and country-specific behaviours. Therefore, the model used, like all economic models, is based on several assumptions and stylised simplifications which must be considered when interpreting the figures. In particular, capital and investment are not part of the modelling structure, and labour cannot reallocate across countries.

The analysis employs a comparative static model, comparing the economy’s state before and after the agreement. These impacts are therefore assumed to be realised in the long run.

Database

All data is set to the baseline year 2019 due to data availability and to avoid bias caused by disruption in trade from the COVID-19 pandemic. This means the baseline does not include international policy changes that have taken place since then.

No adjustment is made for changes in trade policy that are not already incorporated into the baseline, such as recent announcements on tariffs by the USA and other countries, or future growth trends.

In 2019, the UK was trading with Switzerland under the EU-Swiss regime. The UK-Swiss FTA did not enter into force until 2021, after the UK left the EU. The UK-Swiss FTA was based on the EU-Swiss agreement from 1972 and only covered goods. It did not cover services, procurement or intellectual property. The changes in the trading terms since the UK left the EU in 2021 are not reflected in the baseline. However, we do not expect this to have a significant impact on results as the percentage trade cost reductions applied in the model are not directly linked to the initial level of services trade restrictiveness.

In addition, UK trade with Switzerland has grown since 2019, with services trade between the two countries growing by over 70% between 2019 and 2025.^{[footnote 4]} The share of trade by sector has remained broadly stable over this period, so not accounting for the change in trade in the model baseline is unlikely to have an impact on the estimated percentage change impacts.^{[footnote 5]} The pound estimates reflect the increase in trade between the countries since 2019, as the percentage changes from the model are applied to the latest ONS data on the trading relationship between the UK and Switzerland.

4. Modelling inputs

The UK’s existing bilateral agreement with Switzerland, signed in 2019 and based largely on an EU-Swiss agreement from 1972, focuses mainly on goods. Therefore, this enhanced agreement provides greater services liberalisation of trade with Switzerland and locks in existing access to the Swiss market.

The changes in the restrictions under the enhanced agreement affecting services trade have been modelled using the Organisation for Economic Co-operation and Development’s (OECD) Service Trade Restrictiveness Index (STRI), using a set of input assumptions based on the negotiated agreement.^{[footnote 6]} This allows for qualitative information on measures affecting services trade from the agreement to be translated into a quantitative measure.^{[footnote 7]} The same approach is used for assessing the Services Mobility Agreement, noting the counterfactual here is an increase in restrictions above the baseline, should access to the agreement be lost.

For further detail on the DBT approach to services modelling, read the 2021 Services trade modelling working paper and the NQTM modelling paper used in the upgraded UK-Republic of Korea FTA.

5. Uncertainty

5.1 Sensitivity analysis

The range of impacts are calculated using the estimated standard error from the regression and are made to reflect the 95% confidence interval for the parameter β, which represents the responsiveness of trade with respect to changes in the STRI. The reported range concerns the inherent empirical uncertainty about how trade flows will react to the negotiated fall in trade costs.

For more detailed information, read DBT’s 2021 Services trade modelling working paper and the NQTM modelling paper used in the upgraded UK-Republic of Korea FTA.

Table 3: Central estimates and sensitivity analysis (enhanced FTA)

	Lower bound	Central estimate	Upper bound
Change in UK services exports to Switzerland	14% increase (£2.7 billion increase)	26% increase (£5.2 billion increase)	40% increase (£8.0 billion increase)
Change in UK services imports from Switzerland	12% increase (£1.1 billion increase)	23% increase (£2.0 billion increase)	36% increase (£3.1 billion increase)

Source: DBT Modelling

Table 4: Central estimates and sensitivity analysis (SMA)

	Lower bound	Central estimate	Upper bound
Change in UK services exports to Switzerland	2% decrease (£0.4 billion decrease)	4% decrease (£0.7 billion decrease)	5% decrease (£0.9 billion decrease)
Change in UK services imports from Switzerland	3% decrease (£0.4 billion decrease)	5% decrease (£0.6 billion decrease)	7% decrease (£0.9 billion decrease)

Source: DBT Modelling

1. Caliendo L and Parro F. Estimates of the Trade and Welfare Effects of NAFTA, Review of Economic Studies: 2015, volume 82, issue 1, pages 1 to 44 ↩

2. Office for National Statistics (ONS), UK trade in services: service type by partner country, non-seasonally adjusted, April 2026 ↩

3. Caliendo L and Parro F. Estimates of the Trade and Welfare Effects of NAFTA Review of Economic Studies: 2015, volume 82, issue 1, pages 1 to 44 ↩

4. ONS, UK total trade: all countries, seasonally adjusted, October to December 2025 edition ↩

5. ONS, UK trade in services: service type by partner country, non-seasonally adjusted, April 2026. Other Business Services and Financial Services remain as the vast majority of services exports to Switzerland since 2019. ↩

6. Geloso Grosso, M. et al. ‘Services Trade Restrictiveness Index (STRI): Scoring and Weighting Methodology’, OECD Trade Policy Papers, No. 177, OECD Publishing, Paris ↩

7. Geloso Grosso M and others. Services Trade Restrictiveness Index (STRI): Measuring Services Liberalisation and Commitments in the GATS and RTAs (PDF 4.5MB), OECD Trade Policy Papers: June 2021, no. 250 ↩