A British vote to leave the European Union on June 23 could lead to serious negative consequences for Swiss exporters, according to a government agency that promotes Swiss business abroad.
Switzerland Global Enterprise (s-ge) chief executive Daniel Küng said a Brexit is the number one concern for the health of Swiss exports in the near future. It would be a “hammer blow” for struggling companies that have seen margins eaten away by the strengthening franc.
Swiss goods have become 10% more expensive for eurozone customers since the Swiss National Bank (SNB) gave up defending the euro-franc exchange rate in January 2015. Given the continued fragile state of the political and economic environment within European Union, the euro would likely plunge if Britain leaves the bloc, Küng said on the fringes of s-ge’s annual conference in Zurich on Thursday.
“The polls point to a real possibility that a Brexit might take place,” Küng told swissinfo.ch. “If that happens, it could have consequences for the Swiss franc with the euro could weakening fast and more money flowing into Switzerland. Nobody knows at present what the SNB’s reaction would be.”
Some concerned companies have started to prepare for a possible Brexit by hedging their currency exposure, he added. Currency issues far outweigh other global risks, such as a slowdown in Chinese economic growth, low commodity prices and a weakening of demand in some developing economies, Küng told journalists.
Britain was one of the few European Union bright spots for Swiss companies last year with exports rising 16.2% to CHF11.7 billion ($12.1 billion). Swiss exports to the Eurozone, by comparison, fell 6.7%. Companies have been busy diversifying into different parts of the world, but 45% of all exports from s-ge clients still end up in the eurozone
Across the globe, the sale of Swiss goods and services abroad fell 2.6% in 2015 but still managed to register a creditable CHF203 billion ($211 billion) before rallying further in the first quarter of this year.
Despite weathering the strong franc storm better than many economists thought possible, Swiss companies were warned by s-ge on Thursday not to rest on their laurels. One way they could make up ground on foreign competitors is to take a lead in the digital revolution that is currently sweeping over all industries.
The ‘Fourth Industrial Revolution’, or ‘Industry 4.0’, encompasses the rapid digitalisation of factories, logistics and customer support services. Companies will soon be awash with big data and intelligent robots, so had better adapt to the new trading environment, stated s-ge in its Industry 4.0 white paper produced on Thursday.
The fast-changing landscape can also bring vast benefits for small Swiss exporters, Küng insisted. For one thing, Industry 4.0 could help Swiss firms better penetrate growing markets without the need for building up expensive infrastructure in those countries, he said.