Switzerland

Economic growth still moderate in 2025

The Swiss economy grew moderately in 2024 despite the eurozone’s weak performance and increasing global political uncertainty. Relatively strong private consumption and licence income from the EUFA EURO 2024 fixtures and the Olympic Games in Paris had a noticeable impact in Switzerland. The economy should remain robust. Private consumption should post stable growth and remain an important pillar of overall growth. Furthermore, although inflation is likely to fluctuate somewhat over the course of the year, it should never reach 1% and be significantly lower than in the last three years. Both energy and food prices fell in the second half of 2024, ensuring a low starting point in 2025. In addition, the mortgage benchmark interest rate (“hypothekarischer Referenzzinssatz”) set by the Swiss government to regulate the market and guide banks, was lowered in early March of 2025 from 1.75% to 1.5%, i.e., its lowest level since December 2023. It is the first time since March 2020, that the government has decreased the rate, which could have an impact on all new rents (60% of households are tenants), which should benefit from a lower rent. Second, consumption will be also influenced by further rising costs for compulsory health insurance. The average premium will rise by 6% in 2025. This is, however, lower than the increase in 2024, which averaged out at 8.7%. In the meantime, nominal wages should rise further by 1.4% in 2025. While the wage growth rate will be lower than in the last two years (1.7% and 1.6%, respectively), the inflation rate will also be lower, resulting in a noticeably higher real wage growth rate than in the previous years (1.0% instead of 0.5% in 2024), which will improve purchasing power.

Lower inflationary pressure had already driven the Swiss National Bank (SNB) to cut its leading interest rate four times in 2024, from 1.75% down to 0.5%. In March 2025, another rate cut of 25 basis points followed, bringing the interest rate level down to 0.25%, which is deemed the neutral level. As we do not expect monetary policy to become expansive, we expect no further rate cuts this year. Although the lower rate should support the credit-driven financing of corporate investment, the high global geopolitical uncertainty, and especially the potential trade conflict with the US, could keep companies in wait-and-see mode. Nevertheless, positive effects should come from the construction sector. While commercial construction will remain on hold as well, residential construction is set to make a slow comeback from a low level. The leading indicators and higher permit numbers hint in this direction. In addition, civil construction – mainly in public transportation, infrastructure and the health sector – remains an important driver for construction. Projects include, for example, the extension of the Gotthard tunnel with a second tube (total project costs total CHF 2.1 billion), capacity expansion of the railway stations in Geneva and Lausanne, and the extension of the Alpine solar plant projects (Solar Express). There are also plans to enlarge the University of Zurich Clinic and other buildings on the university grounds.

The outlook for Swiss large scale foreign trade is particularly difficult to predict due to the uncertain US trade policy. Switzerland had a trade balance surplus of CHF 34.25 billion with the US in 2023, which is the highest trade surplus with any trading partner (4.3% of GDP). Pharmaceutical exports play an important role and would be heavily affected by tariffs. In the absence of any significant escalation of the US trade conflict, foreign trade is likely to develop moderately with strong pharmaceutical exports, while global demand for machinery, electronics and watches will probably continue to decline. Stronger demand for financial services and robust tourism income should partly offset this. A significant negative factor affecting the real growth of the Swiss economy is the absence of any major international sporting events in 2025. Major sporting event organisers (e.g., the FIFA, UEFA and IOC) support the economy through their licence income. As major (men's) football events and the Olympic Games only take place every two years, this will drag on the economy in 2025.

Healthy public accounts, but more social expenditures are on the horizon

Public accounts continue to show a small surplus for the total government accounts thanks to stronger results by the cantons and the social security system, which more than offset an increased federal deficit. From 2026, the basic pension will include a 13th monthly payment. However, it remains unclear how this is to be financed (either by higher revenues or a budget deficit). The additional costs amount to CHF 4.1 billion in 2026 (0.5% of GDP in 2024). In any case, public debt remains very low and gives no cause for concern.

The country consistently posts a current account surplus thanks to the considerable goods surplus, which in 2024 stood at 14% of GDP. Although finance and insurance, together with sporting licences, play an important role in the external accounts, the services and the primary income balances (e.g., income from investments abroad and cross-border workers) structurally post a small deficit. In addition, there is the structural deficit of the secondary income (transfer) balance, which is the result of foreign workers who work in Switzerland and send home part of their income (403,000 employees in 2024, accounting for 7.6% of total employees). In 2025, any improvement in the goods trade surplus and higher income from financial services should be levelled out owing to the absence of key sporting events. This should keep the current account balance roughly unchanged.

Ample Swiss assets abroad, thanks to recurrent current account surpluses, allow the country to enjoy a substantial positive net foreign investment position (111% of GDP at the end of September 2024), the size of which varies according to stock market prices and the USD/CHF exchange rate.

Stable domestic political situation, but the new trade agreement with the EU could complicate matters

The Swiss political system is extremely stable owing to the country’s tradition of political consensus. The main decisions are taken by referenda. The Federal Council, i.e., the government, comprises seven ministers. The position of President is elected from this group for one year and alternates. Since 1959, the Federal Council has been composed according to the so-called “magic formula”, with the first three parties in the general election receiving two seats each, and the fourth party one seat. To reach the Federal Council, a “new” party must finish in the top four at two consecutive elections, which is rare. Accordingly, the party composition of the council has not changed with the last general election in October 2023. The right-wing national-conservative SVP, the social democratic SP and the liberal FDP have two seats, while the Christian-democratic Center party has one seat. The next general election is scheduled for 2027.

Relations between Switzerland and the European Union have improved. The main problem lies in their trade agreements, which also include parts of migration and employee protection rules. The Bilateral Agreements I and II of 2002 and 2005, and a total of 120 individual agreements currently apply. In 2008, negotiations began on an all-encompassing trade agreement that would summarise and bring up to date the existing individual agreements. However, after years of negotiations, the Swiss government decided in 2021 not to sign the final agreement as it was clear that it would have been rejected in a referendum. The role of the European Court of Justice as a dispute settlement mechanism that could limit Switzerland’s sovereignty was rejected. The preservation of the high level of wage and employee protection in Switzerland was a major point of contention stemming from the fear of unbridled migration in the EU, as was the possible receipt of Swiss social assistance by EU citizens. Relations cooled, but negotiations resumed in March 2023 and were finalised in December 2024 with a new agreement. The new agreement now includes a safeguard clause on migration. Free movement of persons between the EU and Switzerland may be restricted it if causes serious economic and social problems. If the EU does not agree to the restriction, a neutral arbitration court will decide the outcome. The power of the ECJ will also be limited to maintain Switzerland’s sovereignty. If EU law conflicts with Swiss law, an arbitration tribunal will also decide the matter. It does not have to refer to the ECJ to interpret EU law.

The new agreement has yet to be ratified. A referendum in Switzerland is planned for the end of 2025 or the beginning of 2026. Approval is still uncertain, as the SVP, in particular, which was the strongest party in the last elections, opposes closer ties with the EU. The Federal Council has therefore decided to unbundle the overall package and create four partial agreements (free movement of persons and land transport, electricity market, food safety and health). These partial agreements can then be voted on individually in referendums. Nevertheless, it is unclear how the EU will react if only parts of the agreement are approved.

Payment

Bills of exchange and cheques are not commonly used in Switzerland, due to prohibitive banking and tax charges. The stamp duty on bills of exchange is 0.75% of the principal amount for domestic bills and 1.5% for international bills.

Commercial operators are particularly demanding regarding the formal validity of cheques and bills of exchange as payment instruments.

Domestic and international payments are commonly made by bank transfer ? particularly via the SWIFT electronic network to which the major Swiss banks are connected. SWIFT provides rapid and efficient means of processing of payments, at low cost.

Debt Collection

The Swiss legal system presents technical specificities, notably: The existence of an administrative authority known as the Enforcement and Bankruptcy Office (Office des poursuites et des faillites / Betreibungs und Konkursamt / Ufficio di esecuzione e fallimenti) in each canton, with several offices at local government level which are responsible for executing court orders. Their functions are regulated by federal law. Interested parties can consult or obtain extracts from the Office’s records; A new, unified civil procedure code, created by a commission of experts and approved by the Federal Council, became effective in 2011. This code entailed the repeal of the 26 cantonal procedure laws which were hampering the efficiency of the judicial system. Nevertheless, lawsuits require the assistance of a lawyer who is familiar with the court organisation in the jurisdiction where the case is has been initiated, as well as with the language to be used in the litigation process (French, German or Italian).

Amicable phase

The debt collection process commences with the issuing of a final notice, preferably by recorded delivery (making it possible to accrue overdue interest). The notice requests the debtor to pay, within two weeks, the principal amount due, along with overdue interest calculated at the legal rate of 5% (unless otherwise agreed by the parties).

Legal proceedings

If payment is not forthcoming, the creditor can submit a signed and completed petition form (réquisition de poursuite) to the Enforcement and Bankruptcy Office. This Office then serves the debtor with a final order to pay within 20 days, effective from the date of notification of the?petition.

While very easy to use by creditors, this procedure nonetheless permits debtors to oppose the order within 10 days of being served, without having to specify grounds. In such cases, without unconditional proof of debt to cancel the debtor’s opposition, the only recourse for creditors is to seek redress through a formal legal?action.

Before commencing formal legal action, it is mandatory to proceed to mediation or conciliation before a Justice of Peace. This excludes disputes falling within the jurisdiction of the Commercial Court of Zurich, or cases where both parties have agreed to ignore these proceedings and the claim is higher than CHF 100,000.

Legal proceedings entail initiating a formal (and now unified) procedure, comprising written and oral phases, with the possibility of examining witnesses during a court hearing. These procedures can last from one to three years, depending on the canton.

Conversely, where a creditor holds unconditional proof of debt signed by the debtor (any original document in which the buyer recognises his debt – such as a bill of exchange or a cheque), he may request the temporary lifting of the debtor’s opposition (main levée de l’opposition), without having to appear before the court. This is a simplified procedure, which is quick and relatively easy to obtain, and in which the court’s decision is based upon the documents submitted by the?seller.

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Once this lifting order has been granted, the creditor has 20 days in which to refer the case before the judge to obtain the debt’s release (libération de dette) and subsequently obtain an executory order. Once the court hands down a final ruling, the Enforcement and Bankruptcy Office delivers an execution order or a winding-up petition (commination de faillite). This winding-up petition enables the creditor to send the court a request for bankruptcy. Upon receipt of this request, the court will fix a hearing and send a written notice to attend to both parties. If no payment is effected by the debtor and the creditor does not withdraw his request, the court will declare the debtor company bankrupt.

Either a court of first instance or a district court hears legal procedures. Commercial courts, presided over by a panel of professional and non-professional judges, exist in four Germanic cantons: Aargau, Berne, Saint-Gall, and Zürich.

Once an appeal has been lodged with the cantonal court, as a last resort for claims exceeding CHF 30,000, cases are heard by the main federal judicial institution: the Swiss Federal Court (Tribunal fédéral Suisse / Schweizerisches Bundesgericht / Tribunale federale svizzero), which is located in Lausanne.

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Enforcement of a Legal Decision

Insolvency Proceedings

RESTRUCTURING PROCEEDINGS

Restructuring proceedings (Nachlassverfahren) can be initiated either by the debtor or the creditor. The administrator takes the necessary measures to prepare for the creditor and court approval of the composition agreement. An inventory is then taken, where all assets are valued. Approval of the agreement requires the affirmative vote of a quorum of either a majority of creditors representing two-thirds of the total debtors, or a quarter of the creditors representing three-quarters of the total debt. Once approved, the agreement must be confirmed by the Court. It then becomes valid and binding on all creditors of claims subject to the agreement.

BANKRUPTCY PROCEEDINGS

A company may be declared bankrupt by the court and placed into bankruptcy proceedings if a creditor has successfully requested this, following a debtor’s declaration that it is insolvent. The court will determine whether summary or ordinary proceedings should be applied, or whether bankruptcy proceedings will go ahead (if the assets are insufficient to cover the expected costs of proceedings). The Receiver then draws up an inventory. Summary proceedings are ordered if the proceeds of the assets are unlikely to cover the costs of ordinary proceedings. In this case, there are no creditors’ meetings and the bankruptcy office will proceed to the liquidation and realisation of the assets, without the participation of the creditors.

If ordinary bankruptcy proceedings apply, the receiver publishes a notice of bankruptcy instructing all creditors and debtors to file their claims and debts within 30 days. This notice invites creditors to a first meeting (where they may appoint a private receiver instead of the state bankruptcy office) and a creditors’ committee. A second meeting will be convened for the commencement or continuation of claims against third parties and to agree the method for realisation of the assets belonging to the bankruptcy estate.

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Last updated: March 2025