Swiss economy must adapt or lose out, says UBS boss

EU immigration quotas threaten to impose additional costs on Swiss businesses that are already struggling to compete due to a strong franc Keystone

Warning that the model on which Swiss prosperity rests is at stake, Sergio Ermotti, CEO of Swiss bank UBS, has called for the government to act and the economy to adapt in order to maintain Switzerland’s competitive edge.

In an opinion piece published on Wednesday in the newspapers Le Temps, Tages-Anzeiger, Der Bund and Corriere del Ticino, Ermotti said the Swiss economy must be prepared to face new realities in the face of falling growth forecasts.

He was critical of the uncertainties associated with the implementation of the February 2014 vote on immigration quotas for EU workers.

“Local and foreign companies are holding back their investments as nobody knows how access to European markets will be secured and how the relationship with the European Union will pan out,” he said.

His views were also echoed at a media conference on Wednesday by Peter Dietrich, director of Swissmem, the lobby group for the machine building, electrical engineering and metal manufacturing sectors.

“In the past few years we have also witnessed an increase in initiatives that are derived from political parties,” he told swissinfo.ch.

“People’s initiatives are intended to give the people a voice, not power for political agendas. We would like to see fewer initiatives from political parties – whether from the left or right – or we risk losing Switzerland’s favourable climate for attracting investments.”

Businesses are also worried about the costs to business in implementing the immigration quotas.

The government’s plan for implementing the quotas predicts that the additional cost to businesses employing EU nationals will rise from CHF20 million ($21.25 million) to CHF100 million a year.

However, in an interview published in the NZZ am Sonntag newspaper on February 15, the president of Swiss Employers Association, Valentin Vogt, said the government estimates were “significantly low”. He estimates the figure to be in the range of CHF1-2 billion.

Fighting back

Ermotti proposed a series of measures to ensure that the Swiss economy bounces back from last month’s removal of the franc-euro peg, the uncertain future of bilateral agreements, external pressure on financial institutions and the tough regulatory environment.

He asked the government to review existing regulations and get rid of those that have a negative effect on the economy. He also called for improving tax competitiveness by rejecting the inheritance tax initiative, as well as abolishing stamp duty.

The importance of access to the world markets, especially for the financial industry, was paramount for Switzerland, Ermotti said. He stressed the importance of maintaining bilateral agreements with the EU, as well as signing a free-trade agreement with the United States.

He also called on the government to ensure that Swiss businesses can keep their costs low in order to remain competitive. Instead of economic stimulus programmes, the government should focus on investing in sustainable infrastructure, he recommended.