On September 15, we mark the International Day of Democracy—at a time when democratic values are under pressure in many places. A look at the United States makes that plain. In Switzerland, we often feel like we live on an island of stability. In fact, our democracy is quite resilient thanks to its political institutions. Yet, concern is growing here as well over hardened divides: our consensus democracy relies on…
Federal finances are under pressure — and the pressure is increasing: The Federal Council recently had to admit that the procurement of the new F-35 fighter jets could cost up to 1,3 billion francs more than planned. At the same time, it further cut the planned savings package. As a result, deficits are looming again as early as 2028. There is little room for new spending. It’s the worst possible…
Public administration in Switzerland’s ten largest has grown significantly. In 2022, the latest available date, these cities employed a combined total of 36,254 staff members. That’s equivalent to the population of the city of Chur and represents an 13.3 percent increase compared to 2011. Meanwhile, population growth in these cities during the same period was only 9.7 percent. This disproportionate expansion of public administration raises questions. Large urban-rural divide in…
Artificial intelligence (AI) has the potential to transform the world of work. Case studies show that AI applications, including the latest large-scale language models, can significantly increase productivity in professions such as customer service and management consulting. Swiss companies also seem to share this view. Investments in IT, communication and technology already account for 30 percent of all equipment investments by Swiss companies – more than during the dotcom bubble.…
Are high electricity prices putting pressure on Swiss industry? In recent weeks, some industries, such as steel manufacturers, have raised concerns about a loss of competitiveness. The owner of Stahl Gerlafingen noted that electricity costs in Switzerland are roughly five times higher than in France. Public data on electricity prices should be interpreted cautiously, because industrial groups can buy their electricity freely on the market. For example, companies that secured…
Since the launch of ChatGPT at the latest, artificial intelligence has become part of everyday life for the general public. In a survey of computer users, 61% of respondents stated that they use the technology for their work (Deloitte 2023). In the first part of this blog series, we examined the impact of AI on different professional groups in Switzerland. We differentiated between four types of professional groups: those who…
Flying to the moon, becoming the world’s most populous country, excellent growth forecasts: India is playing an increasingly important role on the world stage. With this in mind, the interest of the EFTA states (Switzerland, Norway, Iceland and Liechtenstein) in a trade agreement with India is understandable. After 16 years and 21 rounds of negotiations, India and the EFTA signed a Trade and Economic Partnership Agreement (Tepa) in March led…
Switzerland recently signed a free trade agreement with India within the framework of the EFTA. The world’s most populous country is seen by many Western states as a promising alternative to the increasingly authoritarian China. The agreement is undoubtedly a success, but it did not come without concessions. The next step will be for Parliament to deal with the agreement, to which the Federal Council submitted the dispatch this week.…
Economists are generally not fond of subsidies, as they often lead to market distortions and poor allocation of incentives. This also applies to tax benefits, which are among the most problematic forms of subsidies. It is no coincidence that the legislature notes in article 7, letter g of the Subsidies Act (Subventionsgesetz) that financial aid in the form of tax benefits should generally be avoided. This is because these financial…
“What Is Seen and What Is Not Seen.”: In the 19th century, French economist Frédéric Bastiat developed a didactic tool that continues to help us better understand — and ultimately better shape — government activity. It is easy to lose sight of the fact that every government expenditure has a “hidden” cost. Considering Opportunity Costs Every Swiss franc can only be spent once. If you subsidize tourism (visible), that money…
Promoting business location sounds good to many. However, what the Confederation means by this may be surprising to some. After all, the primary focus is not on improving framework conditions to increase Switzerland’s competitiveness. Instead, a large proportion of the funding goes towards tourism and regional development. Parliament has allocated a total of CHF 429 million for the years 2024–27 – a 15 percent increase compared to the subsidies in…
The European Football Championship is in full swing. Germany beat Scotland 5:1 in the opening game. But for the host country, it is not just about sports. The Euro 2024 and the upcoming Summer Olympics in Paris belong to the category of mega-events where billions are at stake – and therefore politics is always on the pitch. All the more reason to take a look at the five economic principles.1.…
“L’effet naturel du commerce est de porter à la paix […] et toutes les unions sont fondées sur des besoins mutuels.” Most people are probably more critical of the Enlightenment philosopher Montesquieu today than they ever were. Already during the Covid-19 pandemic, supply chains and trade started to be considered a problem. Since the war in Ukraine, economic interdependence as a path to peace has come under pressure.Perpetual peace At…
Global minimum tax, unresolved relations with the EU, shortage of qualified personnel, the banking crisis: the risks for Switzerland as a business location seem countless. For years, there have been warnings of a deterioration of framework conditions – even Avenir Suisse occasionally joined in. But what is the real state of Switzerland’s competitiveness and quality as a business location? In this regard, rankings comparing countries are an important source of…
In its essence, what is banking all about? Many would say it’s the provision of credit. But that is only partly true. Banks don’t just broker money and credit, they also create it – it’s a complex situation. What’s clear, however, is this activity is associated with systemic risk that can lead to bank runs and cause chain reactions in the financial system. Countries have always tried to keep systemic…
The Bologna declaration was signed 25 years ago and launched the reform of European higher education. The aim was to enable graduates of all degrees to enter the labor market, including the bachelor’s degree. Avenir Suisse examined this goal in its latest publication “The Bachelor’s Degree, an Underestimated Diploma”. The reform pursued numerous other objectives as well. To what extent they have been achieved can be found in the Bologna…
Noncommunicable diseases such as diabetes, cancer, and cardiovascular disease account for two-thirds of all deaths in Switzerland. The risk factors for developing these diseases are manifold, and include consumption of foods high in sugar, salt, and fat. By means of industry agreements, the private sector can play an important role in reducing excessive consumption and thus contribute to prevention efforts. In Switzerland, initiatives have been launched with manufacturers to combat…
ChatGPT, a language program based on artificial intelligence, is currently causing quite a stir. The software delivers answers, poems or programming codes in the blink of an eye. It stands for a new type of hardware and software that not only replace humans in simple tasks but can also increasingly take over complex activities such as writing high-quality text (excluding this one, of course). In unprecedented fashion we are being…
Kylian Marcos (Le Temps): The agricultural sector is currently experiencing a revolt in several European countries. In Switzerland, the revolt is focused on the administrative burden. These are closely linked to subsidies, aren’t they? Isn’t this a trap that has fallen on farmers? Patrick Dümmler (Avenir Suisse): Switzerland’s excessive regulations for the agricultural sector and the very high level of subsidies by international standards are the front and back sides…
For many Swiss households, the new year brings higher electricity prices. Compared to 2023, electricity costs for a typical household (H4) will rise over 18 percent on average in 2024. The increase compared to 2021 – when costs began to rise quickly – will be 57 percent. And this, despite the fact that market prices have fallen considerably. Even futures, meaning the current price fixings for electricity supply in one…
Mira is 27 years old and comes from India. She studied computer science at ETH Zurich and graduated with a master’s degree. She feels integrated in Switzerland and would like to work here after graduating. Because IT specialists are in demand, she has no trouble finding a suitable position. However, because her potential employer is unable to justify why Mira’s employment is of great economic interest, she is not granted…
Former Federal Minister of Finance Ueli Maurer described lowering the value exemption limit as a “mission impossible”. This is the maximum amount up to which foreign goods can be imported without paying VAT in Switzerland. The limit is currently at 300 francs per person per day. However, a reduction is expected to result in high administrative costs. The “Mission Impossible” saga includes seven films. At least as many times in…
Since the beginning of the Russian invasion of Ukraine more than a year ago, almost 10,000 civilians have been killed, most of them by air strikes on civilian infrastructures. This has been a wake-up call for other European countries, none of which could currently provide sufficient protection for its population or critical civil and military infrastructure. For this reason, Germany launched the European Sky Shield Initiative (ESSI) in 2022 which…
Contrary to what Martin Rufer, Director of the Swiss Farmers’ Union (SBC), wrote in his guest commentary for the NZZ on 4th September 2023, farmers and their families are not victims of a misguided fiscal policy. They are victims of Switzerland’s failed agricultural policy, that has been significantly shaped by the SBC in the last decades. Using farmers and their families What is at stake exactly? Rufer criticizes the federal…
Over half a century ago, in 1972, we established the three-pillar system of retirement provision in our constitution. In 2025, we’ll celebrate the 40th anniversary of the Federal Act on Occupational Retirement, Survivors’ and Disability Pension Plans, the BVG/LPP. When it was introduced, the Swiss pension model received a lot of attention and was presented as a role model by the World Bank. But has the concept proven its worth…
At the beginning of this month, hundreds of August 1 speeches were held in festive marquees with the smell of bratwurst in the air. And as every year, the infamous reports on the nation’s well-being generally unfolded in three clearly defined acts: Act One, the country has been extremely successful so far. Act Two, the environment has changed. And Act Three, for Switzerland to remain successful, something has to change.…
At the beginning of August, Avenir Suisse’s report on the full financial implications of so-called real bracket creep caused quite a stir ‒ and rightly so. The phenomenon and its effects are largely unknown to the general public, even though the Basel FDP politician Baschi Dürr already described (and named) it back in 2007. Real bracket creep describes the way the entire population slowly rises up the tax table as…
Last year, electricity was in short supply, and prices in the electricity market skyrocketed. Rising prices signal a shortage ‒ for example, during hours of high demand and low production from renewables, and during crises such as the gas shortage resulting from the Ukraine war. However, most consumers in Switzerland have little incentive to respond to these price signals, as they are supplied by their electricity utility (EVU) at a…
On June 12, 2023, UBS formally took over Credit Suisse. This step was announced three months ago, at the historic press conference on March 19. Since then, there has rightfully been fierce discussion about the events surrounding the two major banks. Not only was emergency law applied, but state guarantees amounting to billions were granted. The chosen approach was a result of the power of circumstances and a regulatory failure.…
How much immigration does Switzerland need and want? There are different angles to this question. On the one hand, there is a labour shortage that will worsen owing to demographic ageing. Without any immigration, around 800,000 vacancies would remain unfilled in 2030. On the other hand, there also needs to be a discussion about the consequences of a Swiss population of 9 million. The decision of both chambers of parliament…
As part of the Paris Agreement of 2017 ‒ and backed up by a Federal Council decision in 2019 ‒ Switzerland has committed to becoming climate neutral by 2050. The reduction targets adopted so far are 20% by 2020 and 50% by 2030 versus the greenhouse gas (GHG) emissions of 1990. According to the latest figures from the federal greenhouse gas inventory, the goal was narrowly missed in 2020 with…
A study by the University of Zurich has been stirring things up in Switzerland in the last few days. The alleged and heavily debated core message is that female students in female-dominated fields of study have fewer career ambitions because they stick to traditional gender roles. Now imagine if the cantonal council of Zurich were to take this study as an opportunity to limit the admission of women to disciplines…
There’s a lot of political stalling and idealization going on. The Energy Commission of the Swiss National Council recently decided to stick with an only partially liberalized energy market. It’s following the lead of the Council of States, which has also rejected the idea of a full opening of the energy market. This breaks an even older political promise: Since 2014, the choice of electricity supplier should have been completely…
Alfred Escher’s bank is history. A toxic cocktail of private mismanagement, governmental knee-jerk reactions and shaken confidence has taken its toll. The history of scandals and mismanagement at Credit Suisse had long weighed heavily. According to reports, clients and major investors had been divesting themselves of the Swiss bank’s products and securities for months. Following the second and third largest bank failures in history in the US in March, the…
Recently, a discovery of so-called rare earths in Kiruna, Sweden, caused a great uproar in the media. Rare earths are a group of 17 elements that are often grouped together because they occur commonly and have similar properties. The EU Commission lists them as critical raw materials alongside metals like cobalt, lithium, and titanium. This means that they are of crucial economic importance, but cannot be reliably mined in the…