Swiss location unattractive
The Swiss location is becoming unattractive, that is how the European Investment Monitor of the consulting firm EY can be summarized. In Switzerland, the number of investment projects from abroad has fallen slightly from 90 to 88 projects. What are the consequences?
According to an EY study, Switzerland is an unattractive location. Europe, on the other hand, is surprisingly attractive. The reason: Never before has so much been invested in companies from all over the world as today: The number of foreign direct investments in Europe rose by 16 percent to 5,873, as the current evaluation of the European Investment Monitor by the consulting firm EY shows.
This continues the trend of recent years: Since 2012, Europe has seen a continuous increase in the number of direct investments - in the last three years, growth has even been in double digits. This investment activity is also reflected in the labor market. Last year, companies announced the creation of over a quarter of a million jobs in Europe with their foreign direct investments.
Switzerland loses ground
The situation is different in Switzerland, where the Swiss location is unattractive: Here, the number of investment projects from abroad fell slightly from 90 to 88 projects. In 2015, the increase was already significantly below the growth of Europe as a whole. And Switzerland is also lagging behind Europe in terms of longer-term development: The number of investment projects is still around 50 percent below the pre-crisis level.
"The results for Europe are very pleasing, but the Swiss figures make me less happy. Although Switzerland as a location has been ahead in terms of national debt, unemployment, growth and infrastructure for decades, the strong franc has meant that the number of investments from abroad has been low for a very long time and no longer reaches the level of before the global financial crisis," says Marcel Stalder, CEO of EY Switzerland.
Location consensus under pressure
Philip Robinson, Tax Partner and Member of the Board of Directors of EY Switzerland, adds: "Compared to the time before the financial crisis, Switzerland has also become less attractive as a business location due to the uncertainty about the future shape of the corporate tax reform, which has lasted for several years. The adoption of the Minder initiative and the mass immigration initiative are further elements that have deterred companies from investing in Switzerland. The rejection of the first draft of the Corporate Tax Reform III has also shown that the location consensus that has existed in Switzerland for decades can no longer be taken for granted."
Despite the stagnation in direct investment projects, the number of new jobs created by foreign investment in Switzerland jumped from just under 1,400 last year to more than 3,400. However, this record figure is attributable to a few large projects; the number of jobs created is basically still below the level of 2007 and 2008.
Switzerland remains one of the largest investors
Switzerland carried out 289 investment projects in other European countries last year, putting it in sixth place ahead of G7 countries such as Japan and Italy. In a per capita comparison, Switzerland carries out by far the most investment projects abroad in Europe. The number has more than doubled since the outbreak of the financial crisis in 2009 and has increased steadily over the past four years. Swiss companies also create a lot of jobs: The EY study counts over 7,100 jobs created as a result of direct investments in other European countries.
One in four direct investment projects by Swiss companies within Europe served to establish or expand production capacities; almost 3,200 new jobs were created in the process. Typical projects are plants for the production of components for vehicles, food processing plants or factories for the production of construction materials. Eastern Europe is often the target of such investments - almost every second manufacturing job created by Swiss companies is in this region. Poland benefited the most out of the total of 13 target countries.
Swiss companies initiate the most investment projects - albeit usually on a smaller scale - within Europe in the area of sales and marketing. In this way, they open up new markets.
More details from the European Investment Monitor of the consulting firm EY can be found at here
