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Economic Prospects for 2010

The prognostics for Switzerland in 2010 are not especially optimistic.

According to the Swiss unions, purchasing power will strongly decline in 2010 as prices rise, inflation begins, and salaries stagnate.

We might point, at this juncture, that the unions and syndicates of Switzerland were all willing advocates of the open markets in Switzerland and the integration with the European community, which is the principal causative factor of the decline in purchasing power and standard of living.

Currently the unions are predicting a decline in the gross national product of about 3%, with a further decline in 2010 of perhaps 1%. The unions’ predictions are more pessimistic than the government economist’s because they take into account precisely the decline in purchasing power which will have a strong effect on the Swiss economy for some time to come.

The decline in purchasing power of Swiss households is estimated to diminish by several billion francs in 2010 as a result of the massive rise in health insurance premiums, a rise in the CO2 tax, and austerity measures by the different cantons to brake the acceleration of public debt. Overall the forced savings represents about 1% of the GNP – about 5 billion francs. Converted into employment, this equals about 40,000 jobs !

The current recession is expected to follow a W pattern and the positive signs of improvement are expected to reveal themselves later on as just a simple renewal of stocks. The small perceived rise in production is not a sign of rise in demand as claimed by certain over-optimistic observers. And the rise in unemployment is expected to further damage demand down the road.

A variety of economists and commentators are expecting to see over 250,000 unemployed by 2010. This constitutes a historic record for Switzerland and of course the record unemployment will cause ancillary damage in psychological problems and other health and social problems.

Further, 2009 has seen the destruction of banking secrecy in Switzerland, leading to an important exodus of foreign funds under management in Switzerland. Subsequent to the agreement made with the United Sates, the Swiss federal government is now besieged with demands for similar cooperation from France, Germany, Turkey, and elsewhere.
No one has yet provided a credible estimate of the part of GNP made up by the Swiss financial services sector but private estimates such as by Banque Pictet in Geneva have estimated that the removal of Swiss banking secrecy will cost roughly 100,000 jobs in Switzerland.

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