Swiss government delays action over strong franc

The Swiss government met in Bern for an extraordinary session on Monday as ministers try to restrain the Swiss franc. 

Finance minister Johann Scheider-Ammann said he shared the view of the National Bank (SNB) that the franc was considerably overvalued and that an intervention in the financial markets may be necessary. 

“Further measures are being assessed. They have to be taken at the right moment and not just in the short-term,” Schneider-Ammann told the Tages Anzeiger.

He referred to measures already taken like compensation for reduced working hours and the stated goal to finalise further Fair Trade Agreements with countries like China, India and Russia.

As yet, no concrete decision has been made and details on any potential measures are not expected until Tuesday or later. The government will meet on August 17th and in the coming weeks to address the situation.

Switzerland is currently performing well internationally and compared to its neighbouring countries. But today the NZZ newspaper reported that the Swiss stock exchange fell clearly into negative territory with major indices making heavy losses.

What Schneider-Ammann said in his five-minute meeting with the media on Monday evening did little to calm Swiss politicians as they are waiting for days on a decisive act from the Bundesrat or at least a clear signal.

Business expert Pirmin Bischof of the Christian Democratic People’s Party (CVP) showed his disappointment in Scheider-Ammann: “I miss the strong communicative opinion of the Bundesrat,” he told the Tages Anzeiger newspaper.

Social Democratic Party (SP) minister, Susanne Leutenegger-Oberholzer, spoke to the Tages Anzeiger of a “communication politics, which is leading Switzerland into a black autumn and winter. Neither the National Bank nor the Bundesrat seem to be taking the crisis seriously.”

Leader of the Green Party, Ueli Leuenberger, had a similar view: “The Bundesrat should not leave people alone with their fears about the workplace and their savings.”

Representatives of the SVP have no problem with the restraint of the government: “Room for manoeuvre in Switzerland is tight,” said member of the Swiss National Council and Trade Commission president Hansruedi Wandfluh: “If he came out with statements without substantial content, then he would make a laughing stock out of himself.”

His colleague and bank expert Hans Kaufmann sees it similarly: “The financial markets are not stupid and are not dazzled by well-meaning statements.”  


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Why Switzerland continues to attract foreign companies despite the coronavirus pandemic

Despite the pandemic, 220 foreign businesses set up their offices in Switzerland in 2020.

Why Switzerland continues to attract foreign companies despite the coronavirus pandemic
Switzerland is a magnet for foreign companies. Photo by Valeriano de Domenico/AFP

While this number is 9 percent lower than in the previous year, these companies have created 11 percent more new jobs — a total of 1,168 — than in 2019. Most of the new jobs were created by companies from China, the United States and Germany.

About 3,600 more positions are expected to be offered by these enterprises in the next three years, according to data from SRF, Switzerland’s public broadcaster.

In fact, Switzerland is one of the very few countries that have been able to attract international companies to its shores in 2020, a notoriously bad year for the global economy.

READ MORE: Why Switzerland’s economy is on the up despite the coronavirus pandemic

Experts believe this is due to the country’s strengths, including political, economic and financial conditions.

“Even in a time of crisis, Switzerland scored thanks to its stability, predictability and security”, said Patrik Wermelinger, member of the executive board of Switzerland Global Enterprise (SGE), which promotes the country abroad on behalf of the federal government and the cantons.

There are also other reasons that had prompted foreign companies to come to Switzerland in 2020, despite the economic uncertainty and travel restrictions.

“Protection of legal rights, freedom, and personal responsibility are stronger in Switzerland than in many other countries, even in times of pandemic”, said SGE’s co-president Walter Schönholzer.

Switzerland’s attractiveness is also boosted by studies showing the country’s economy remains the strongest in the world.

Even though the health crisis plunged Switzerland’s economic activity into a “historic” 8.2-percent slump in the second quarter of  2020, the country still boasts the world’s most resilient economy, according to research by an insurance and reinsurance company Swiss Re. 

The International Monetary Fund (IMF) expects a 3.5-percent rebound in Switzerland’s gross domestic product (GDP) in 2021.

It said Switzerland’s economy absorbed the shock of the pandemic better than other European countries and it “has navigated the Covid-19 pandemic well”.

IMF added that Switzerland’s “early, strong, and sustained public health and economic policy response has helped contain the contraction of activity relative to other European countries”.