OECD gives Switzerland’s economic policy positive write-up 

To increase Switzerland’s economic resilience and productivity, the OECD recommended in its new report that domestic competition be strengthened and the administrative burden on companies be reduced. KEYSTONE/© KEYSTONE / ENNIO LEANZA

Switzerland's economy is well on track, as confirmed by the Organisation for Economic Co-operation and Development (OECD) in its country report.  

However, the organisation did recommend the country further open up foreign policy and expand trade relations to become more resilient.  

To increase Switzerland’s economic resilience and productivity, the OECD recommended in its new report that domestic competition be strengthened and the administrative burden on companies be reduced.  

The organisation advised against costly industrial policy initiatives such as state subsidies or protectionist measures, according to a statement from the State Secretariat for Economic Affairs (Seco) responding to the OECD report on Thursday.  

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Seco said that the OECD’s recommendations were in line with the country’s direction and that the unilateral abolition of industrial tariffs at the beginning of this year was an important step towards reducing trade barriers. Another was the adoption of the negotiating mandate with the EU.  

Seco continued that further important work to expand and consolidate trade relations was underway, including the recently signed free trade agreement with India and freshly concluded modernisation of the free trade agreement with Chile. 

Recent crises well managed  

The OECD emphasised that Switzerland had coped well with recent crises, such as the coronavirus pandemic and the sharp rise in energy prices following Russia’s invasion of Ukraine, and that the economy has shown itself to be resilient.  

The system of national economic supply, based on the responsibility of companies and only providing state intervention on a supplementary basis and for essential goods, was also praised, and it recommended that Switzerland retain this system.  

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Unemployment and inflation are low in Switzerland and the standard of living is among the highest of the 38 OECD member countries, reinforced by a dynamic market economy, a highly qualified labour force and prudent macroeconomic policy.  

Competition at risk after bank merger  

However, the OECD expressed concern about the emergency takeover of Credit Suisse by UBS, which although secured financial stability, has created new risks and challenges for the Swiss economy. The takeover, the largest bank merger since the financial crisis, has created a group with total assets almost twice as large as the country’s GDP. 

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According to the OECD, the merger of the two largest Swiss banks also raised questions about competition, with the combined bank accounting for around 25% of domestic deposits and loans. The OECD therefore recommended that the Swiss authorities continue strict supervision and monitoring of the banking giant. 

Adapted from German by DeepL/kp/amva 

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