Staid Switzerland has had to deal with many challenges in recent times. The once cherished bank secrecy system is set to end; the attraction of the Swiss Franc as a safe haven has made the main cities the most expensive in the world, and after last Sunday an anti-immigrant party remains the biggest party in the federal parliament.

 

The right-wing Swiss People’s Party (SVP), the biggest party in Switzerland’s lower house of parliament, won 29.4% of the vote and 65 seats from 54; the pro-business Free Democrats or Radicals (FDP) also raised their representation to 33 from 30 in the 200 seat parliament. The leftist Social Democratic Party (SP) came second, winning 44 seats — two fewer than last time. In December parliament will vote in elections for the 7-member cabinet known as the Federal Council.

El País, Spain's biggest newspaper, commented via Euro Topics:

[While in mayoral elections in the German city of Hamburg the majority voted for Henriette Reker, who backs a generous policy for taking in refugees, the conservative national SVP won Swiss parliamentary elections held on the very same Sunday. Yet both societies should be aware of the opportunities successful integration can bring, the centre-left daily El País points out: "When two such similar societies vote so differently it is an indication of how volatile public opinion can be on this issue. If they manage the situation properly neither state need feel threatened by the wave of refugees, and Switzerland even less so than Germany because while the latter has received hundreds of thousands of asylum seekers this year, the Swiss state has only received 12,300...Switzerland knows from experience that with adequate integration measures immigrants don't bring problems. On the contrary: they can provide a solution to the decline in population."]

Swissinfo, the international service of the Swiss Broadcasting Corporation (SBC), reports that the Basler Zeitung said the centrist Christian Democratic Party now had to “seriously think about how it wants to spend the next ten years...It will have to decide whether it wants to return to the centre-right camp or continue to act as the office assistant of the [left-wing] Social Democratic Party”. 

The Tages-Anzeiger in Zurich saw post-election Switzerland as a “divided land.” “The new centre, which acted as a pivot between the two blocs in the previous legislature, has been penalised.” 

It added that the pace and agenda would now be set by parties “which accept failure regarding old age pensions and the transformation of the energy sector.”

“Out of fear the Swiss opt for isolation” was the headline in Germany’s Die Welt, which, along with other papers such as Il Sole 24 Ore in Italy, said the Swiss cabinet’s discussions with Brussels would now be even more difficult. 

According to the Financial Times, “the strengthening support for the [People’s Party] as Switzerland’s biggest party provides an early indicator of the European political fallout trigged by asylum seekers fleeing wars in countries such as Syria, and could presage rising electoral support for far-right, anti-immigration parties in other countries.” 

Il Corriere della Sera in Italy, noting the election to the House of Representatives of Magdalena Martullo-Blocher, daughter of People’s Party’s billionaire figurehead Christoph Blocher, saw similarities with a French political family. 

“In many aspects the ascent of [Martullo-Blocher] can be compared with that of Marine Le Pen, leader of the far-right Front National in France and daughter of the movement’s founder, Jean-Marie Le Pen.”

The relationship with the European Union is important but the SVP opposes existing bilateral treaties with the EU. It won a referendum opposing EU's freedom of movement principle, which Switzerland had earlier agreed to respect.

Last month Patrick Odier, chairman of the Swiss Bankers Association said:

"Our relationship with Europe is complex, and has become more complicated as a result of the referendum on mass immigration that was held on February 9th 2014, and the lack of solutions to institutional issues. This situation creates harmful consequences for the Swiss economy as a whole, and the financial centre in particular. In light of the rise in protectionist regulation, the banking sector is seeing itself marginalised and even risks being excluded from the large European market. A substantial part of the banks’ substance could leave Switzerland if this issue is not resolved. At the same time, we face obstacles at the domestic level, in terms of our ability to attract the talent and skills that we require as an international financial centre."

Swiss franc euro, economy

Tax and exchange rates

Switzerland is one of the most stable economies in the world and has not been in conflict with another country since 1505.

The clash between the influence of the austere religious doctrine of Frenchman John Calvin who had taken refuge in the Alpine country, which centuries later hosted the plunder of foreign dictators or hidden the wealth of Holocaust victims, was a far cry from the gripes of the main character Michel, in the 1902 novel L'Immoraliste, of renowned French writer, André Gide (1869-1951):

"I detest these honest folk. I may have nothing to fear from them, but I have nothing to learn from them either. And they have nothing to say...Oh, these honest Swiss. Where do their good manners get them?...They have no crime, no history, no literature, no art...They are like a sturdy rosebush without thorns or flowers."

In 1934 Switzerland passed the Swiss Federal Banking Act, which made disclosure of clients’ identity a criminal offence. The move followed the 1932 'Paris affair' at the Paris branch of the major Swiss bank Basler Handelsbank (BHB). Two of the bank’s staff were arrested in October 1932 in Paris when they met with French citizens who they were trying to help avoid France’s coupon tax. A list of more than one thousand client names, including some prominent French personalities, fell into the hands of the authorities.

The first brick to fall from the banking secrecy wall fell out in 2009 when the US demanded UBS, the biggest Swiss bank, to surrender the names of 4,450 American tax cheats it had recruited. The Swiss government gave approval to the handover.

Following several leaks of information on foreign tax evaders who were clients of Swiss banks, Switzerland, has agreed with the OECD and EU to automatic exchange of bank client information. Pierre Moscovici, EU commissioner, said that the agreed automatic exchange of information was "another blow against tax evaders and (represents) another leap towards fairer taxation in Europe."

The Swiss Franc hit a rate versus the euro peaked at 1.68 in Oct 2007. It is now about 1.09.

The Swiss National Bank (SNB), the central bank, capped the rate in 2011 and allowed a free float in January 2015 as the European Central Bank was preparing to push down the value of the euro through quantitative easing (QE) or bond-buying in the market.

The Swiss economy remains resilient despite the pressure on exporters.

Earlier this month Switzerland's KOF economic research institute raised its 2015 and 2016 growth forecasts for the Swiss economy and said it expected the Swiss franc to remain steady at around 1.10 to the euro through 2017.

The think-tank forecast GDP growing a real 0.9% this year and 1.4% in 2016 as exports pick up and consumer spending recovers. It expects 1.8% growth in 2017.

The Zurich-based institute had in June expected that Switzerland's economy would expand 0.4% in 2015 and 1.3% in 2016.

The EU accounts for more than half Swiss exports.

Pic on top: Simonetta Sommaruga, president of the Swiss Confederation, greets Chancellor Angela Merkel at Berne-Belp Airport, 3 Sept 2015.