Guidance

Overseas Business Risk: Switzerland

Updated 16 February 2021

1. Overview

In 2020 the long-standing Global Competitiveness Index World Economic Forum’s rankings have been paused. Instead, a special edition dedicated to elaborating on the priorities for recovery and revival, and considering the building blocks of a transformation towards new economic systems, was published. Switzerland once again came out on top, ranking fourth in performance on economic transformation readiness. Despite COVID-19, the Swiss economy has proven relatively resilient. This is likely attributable to the ‘kurzarbeit’ (furlough) scheme.

Switzerland’s economy continues to benefit from a highly skilled labour force of 5 million, a stable political environment, liquid and sophisticated financial markets, low taxes, strong domestic purchasing power, well-developed infrastructure, a stable macroeconomic environment and a strong service sector.

According to the Swiss Secretariat for Economic Affairs, Swiss GDP shrank -3.3% in 2020; 3.0% growth is forecast for 2021. Financial services constitute just over 10% of Swiss GDP and Swiss financial institutions are currently adapting to the new international regulatory environment. Switzerland is home to a number of multinationals, and exports make a vital contribution to GDP. Switzerland’s most important trading partners are the industrialised countries. The European Union (EU) is Switzerland’s main trading partner followed by the USA, China and Hong Kong. In 2019, the UK was Switzerland’s 3rd largest trading partner by monetary value.

In addition to the EFTA Convention and the Free Trade Agreement with the EU of 1972, Switzerland currently has a network of 31 free trade agreements (FTAs) with 41 partners. Switzerland normally concludes its FTAs together with its partners Norway, Iceland and Liechtenstein, in the framework of the European Free Trade Association (EFTA), but also enters into FTAs outside the EFTA framework.

Switzerland is not a member of the EU, and is not likely to join in the foreseeable future. It has extensive access to the Single Market through a series of 120 bilateral agreements, including the free movement of persons. Switzerland has brought much of its regulation and practices into line with EU standards. However, protectionist measures remain in some areas - agriculture and recruitment services are examples of sectors where British companies have recently been affected.

Switzerland is currently negotiating an Institutional Framework Agreement with the EU, which seeks to bring the core Swiss-EU bilateral deals which give Switzerland access to the EU’s single market under one umbrella governance agreement.

2. Economic relations: UK - Switzerland

Following the decision to leave the EU, the UK has negotiated five agreements to ensure continuity in our relationship. These include a Trade Agreement, which includes provisions on trade in goods, (including tariffs, tariff rate quotas and non-tariff measures), intellectual property and government procurement. The Services Mobility Agreement between the UK and Switzerland ensures continued bilateral access into each other’s markets. These agreements came into effect on 1 January 2021.

In terms of exports, Switzerland is the UK’s most important non-EU trading partner after the USA and China. There is strong trading relationship in both trade in goods and trade in services.

Switzerland is the ninth largest investor in the UK, with a total stock value of £64.9bn in 2019.

Approximately 43,000 British nationals live in Switzerland and over 900,000 British tourists visited annually.

Key factors that can benefit British Trade into Switzerland include:

• strong demand for high quality products and services with competitive prices
• highly automated and efficient manufacturing sector
• a strong Swiss Franc makes UK products highly competitive
• Switzerland’s central location within Europe is a springboard for third country business
• English widely spoken
• excellent public infrastructure

Specific information and sector briefings can be downloaded from the DBT website.

In 2019, UK goods and services exports to Switzerland were worth over £27.5 billion (over £317.9 billion total bilateral trade). Switzerland is the UK’s seventh largest export market and the third largest non-EU market after the USA and China. Switzerland is overall our ninth largest trading partner.

The exchange rate makes the Swiss market favourable for British exporters and Swiss purchasing power is one of the world’s highest. Switzerland offers major export opportunities in the areas of pharmaceuticals, financial and business services, non-ferrous metals, works of art, ICT and to large scientific research centres.

Aid-funded business also offers prime export opportunities. Thirty United Nations (UN) organisations are headquartered in Geneva making it a significant centre for UN procurement of products and services.

3. Political and historical situation

Founded in 1848, the Swiss Federal State comprises 26 cantons, each with extensive political powers. Berne is the federal and administrative capital, although Zurich is considered the financial and commercial centre. Other major cities include Geneva, Basel and Lausanne.

Traditionally, Swiss politics are characterised by consensus and stability, and voters have a large say in the political and administrative life of their country through a long-standing tradition of referenda on a wide range of issues. National elections are held every four years, and are next scheduled for October 2023.

Largely because of its strong commitment to neutrality, Switzerland is not a member of the EU, EEA or NATO, although it participates in some NATO activities as a member of the Partnership for Peace programme and the Euro-Atlantic Partnership Council (EAPC).

Switzerland is a founding member of the European Free Trade Association (EFTA), and has been a member of the World Trade Organisation (WTO) since 1995. Switzerland only joined the UN in 2002 after a narrow vote in favour. In 2011, Switzerland launched its candidacy for a non-permanent seat on the UN Security Council for the 2023-2024 term. Switzerland signed a Free Trade Agreement with the EEC in 1972. In 1999, Switzerland signed agreements with the EU covering:

• free movement of persons
• technical barriers to trade (Mutual recognition agreement)
• public procurement markets
• agriculture
• overland transport
• civil aviation
• research

A further set of agreements were signed in 2004, which covered:

• Schengen/Dublin
• automatic exchange of information
• combating fraud
• processed agricultural products
• environment
• statistics
• MEDIA programme (Creative Europe)
• pensions
• education

4. Bribery and corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.

In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case, it does not matter whether the acts or omissions, which form part of the offence, take place in the UK or elsewhere.

Switzerland and Liechtenstein have extremely low levels of corruption. According to the Transparency International’s corruption perception index (CPI), for 2020 Switzerland ranked 3rd out of 180 countries. Strict application of the WTO’s procurement standards in Switzerland has had a positive impact.

Read the information provided on our bribery and corruption page.

5. Human Rights

Swiss cities regularly feature amongst the best places in the world for expatriates to live, largely due to political stability, low crime rates and good medical facilities. In January 2013, the Economist Intelligence Unit ranked Switzerland as the best place in the world to be born, citing stability (economic and political) in uncertain times.

Human rights are comprehensively guaranteed in Switzerland and it is often at or near the top in international civil liberties and political rights rankings. The rule of law and strength of democracy are strong, as are respect for human rights and tolerance. Promoting respect for human rights is a constitutional objective of Swiss foreign policy and a permanent feature of political discussions. Freedom of speech is respected and recognised and there is a free, albeit small press. In the 2020 RSF World Press Freedom Index, Switzerland is ranked eighth.

6. Terrorism threat

Read the information provided on our terrorism threat page.

7. Protective security advice

Most visits to Switzerland and Liechtenstein are trouble-free. There is generally a low rate of serious crime in both countries compared with other European countries. However, crime does occur and you should be aware that petty theft is on the increase. Be particularly alert to pickpockets, confidence tricksters and thieves in city centres, airports, railway stations and other public places. If travelling overnight by train, you should take precautions against being robbed while you sleep by opportunist thieves. You should not become involved with drugs of any kind.

Read the information provided on our protective security advice page in our FCDO travel advice.

8. Intellectual Property

For information on obtaining a patent in Switzerland, you should contact the Swiss Patent Office: Swiss Federal Institute for Intellectual Property (IGE). To file a patent of your invention, register a trademark, or protect a design with IGE: the institute examines national applications, grants protective rights and maintains the official Swiss register of IP titles.

A signatory to all major international conventions; Switzerland’s high ranking in the Global Innovation Index is due in part to its high quality of intellectual property administration and high level of protection.

Read the information provided on our Intellectual Property page.

9. Organised crime

Foreign visitors and residents can be targeted by scam artists. These scams can pose great financial loss to victims. Please ensure that if you receive emails or calls requesting personal or financial data that you are sure that they are not fraudulent.

As in many other European countries, international organised criminal activity takes place in parts of Switzerland, in particular linked to money laundering, drugs, cybercrime and child sexual abuse and exploitation. There is close cooperation between the UK and Swiss law enforcement agencies to tackle these threats.

Read the information provided on our organised crime page.

10. Contact us

Contact the DBT team in Switzerland for more information and advice on opportunities for doing business in Switzerland.