The political structure of Europe is vastly changing before the very eyes of many long time citizens and patrons. For the most part, the British vote to leave the European Union (Brexit) has not been good news for most of the European countries.
With many downturned economic trends forecasted for the next few months, the minds of many are filled with doubt. In regards to Switzerland, there are many impacts that the Swiss will feel, that hit uncomfortably close to home. Here are 3 ways the Brexit vote affects the economy of Swiss.
As a result of the Brexit vote the Swiss franc has rose sharply overnight, which has caused the government to step in and curb the spike. This is bad news for Swiss exporters, who are now forced to squash costs while cutting their prices as this is the only way for them to remain competitive at this point in time.
The franc has been known to be a fairly stable investment and has gained that reputation over the past years and has been known as a flagship for many investors. However, that reputation is at stake now with the increased volatility approaching. It is predicted that in order to get the franc back to normal will have a devastating impact on interest rates.
Stock Markets as a whole are down all over the world, but more specifically the Swiss Market Index (SMI) has toppled by more than 5% which crushed the large Swiss Banks. UBS shares were down 9% as of Friday morning and Credit Suisse, a staple in the banking industry, saw more than 10% of it’s value wiped away. Although these were major hits to start a Friday morning, the market has begun to climb back, but the damage has already been done.
The Swiss have been in negotiations with the European Union to decide on legislation in regards to curbing the immigration to Switzerland. This legislation is to help combat the fact that the Swiss simply cannot keep up with the constant inflow of immigrants to their country. The negotiations have been thrown into turmoil once before in 2014, resulting in an angry Belgian government.
However, with Brexit turmoil on the rise these negotiations are sure to be throw into disarray again, alluding to the fact that they may not reach the concrete February deadline. This deadline is crucial to the swiss economy because immigrants are here to work, but the country is approaching a deficit in housing and employment.
With most of the world in turmoil, the Swiss are no exception to that statement. However, with a fairly distant connection to the European Union, the Swiss should reach equilibrium once again, but it is going to take some time.