Switzerland lies in the heart of Europe, surrounded on all sides by EU member states (Germany, France, Austria and Italy), but it remains outside the block and retains its own currency, the Swiss Franc. Inevitably, it has close ties to the EU which is its largest trading partner and is a member of EFTA (European Free Trade Association). Relations with the EU were disturbed by a Swiss referendum which seeks to cap the rights of EU nationals to live and work within the nation – the full ramifications are yet to be felt as the decision remains to be implemented by the Swiss government.
In the second quarter of the year, the Swiss economy had been expected to grow by 0.5%, but in the end it failed to expand at all – its worst performance for two years. The lacklustre performance has been blamed on weak demand from the EU and a fall in activity in the Swiss construction sector. There is speculation that the European Central Bank will be forced to stimulate the EU economy which could cause the franc to appreciate against the Euro, putting further pressure on Swiss exports.
On the other hand, the World Economic Forum has crowned the Swiss economy as the most competitive in the world. The evaluation is made against a basket of parameters which include infrastructure, labour market efficiency, education and training, innovation and technological readiness amongst others. Singapore was second ranked whilst the world’s largest and second largest economies (USA and China) came in third and 28th respectively. Germany came 5th and the UK was 9th in this year’s rankings which seek to provide a comparative mechanism for the world’s 144 leading economies.