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ECONOMY

ANALYSIS: How Switzerland’s major parties disagree on how to revive economy?

Starting on May 4th and until May 8th, Swiss MPs are holding an ‘extraordinary session’ of parliament to debate the future of the country’s economy, which has weakened during the global Covid-19 pandemic.

Published: 4 May 2020 16:09 CEST
ANALYSIS: How Switzerland’s major parties disagree on how to revive economy?
Some politicians say Swiss National Bank should play a role in the economic recovery. Photo by AFP

The parties and deputies have divergent views on how to help Switzerland’s economy recover from the massive losses, estimated to be at least between 22 and 35 billion francs.

SVP/ UDC: ‘Immediate lifting of the emergency measures’

On its website, the right-wing Swiss People's Party calls for the immediate lifting of the emergency measures imposed by the Federal Council on March 16th, which, the party claims, costs Switzerland 6 billion francs per week.

“The measures against the coronavirus have disastrous effects on the economy”, the SVP said, adding that “more than a third of employees are partially unemployed and more than 150,000 people have lost their jobs” during the crisis.

Switzerland’s largest party also wants to suspend the free movement of people, which would enable employers to give Swiss residents priority in hiring, and to “stop distributing hundreds of millions of francs abroad”. 

Noting also that about 97 percent of those who died from Covid-19 were people aged over 65,  with preexisting pathologies, the SVP points out that this segment of the population should remain under the lockdown, while the others “must once again be able to go to the shops, work and participate in social life — in short, live normally”.

READ MORE: Swiss government criticised for not doing enough to revive economy

Social Democrats: Strengthening purchasing power

The socialist party plans to present a motion this week calling for the government to strengthen the purchasing power because “many people rightly fear for their basic needs”, the group wrote in its press release.

“In the context of partial unemployment, wages must be guaranteed at 100 percent, for all incomes up to the median wage,” the party’s leader, Roger Nordmann, said.

The group is also requesting an investment program and a fund that is financed by the Swiss National Bank’s (SNB) reserves and high-income individuals.

READ MORE: 'Solidarity tax': Should the wealthiest Swiss pay more to help country overcome coronavirus crisis? 

PLR: A ‘liberal strategy’ to end the crisis

For the parliamentary group of the Free Democratic Party it is “imperative to avoid a collapse of the economy, thousands of jobs being threatened”.

The party also supports the Federal Council’s initiative to allocate additional funds to overcome the crisis, including to the military and the aviation sector.

The PLR is also urging the Federal Council to invest specifically in research and development “to deal with this crisis and to prepare for similar crises in the future”.

PDC: Strengthening the health system and supporting children’s care

The Christian Democratic party has announced that it would intervene “to strengthen the health system, sustainable economy, and political rights”. It also unanimously approved the supplement to the 2020 budget as proposed by the Federal Council.

The PDC would also like an additional 65 million francs to be made available to childcare institutions, which are in need of financial assistance due to the loss of revenue resulting from the coronavirus crisis. 

The group is also urging the Federal Council “to examine all measures aimed at reducing, in the future, the dependence of the Swiss economy on international supply and production chains”.

The Green Party: Helping nurseries rather than airplanes

The Greens advocate the distribution of the reserves of the Swiss National Bank to those who have been most impacted by the health crisis, including nurseries and day care facilities. Additionally, companies with short-term unemployment should not distribute dividends to their shareholders.

The party also demands that investments intended to support the economy respect the climate.

“The structural mutation accelerated by the COVID-19 crisis must be oriented in a socially, ecologically, and climate- sustainable direction”, the party noted on its website. 

READ MORE: Swiss economists insist country must reopen more rapidly 
 

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ECONOMY

How is Denmark’s economy handling inflation and rate rises?

Denmark's economy is now expected to avoid a recession in the coming years, with fewer people losing their jobs than expected, despite high levels of inflation and rising interest rates, The Danish Economic Council has said in a new report.

Published: 30 May 2023 15:46 CEST
How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year. 

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’,  Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.  

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn. 

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment? 

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024  about 1 percent below the estimated structural level. 

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending? 

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”.  The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”. 

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025. 

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023. 

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write. 

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers. 

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.” 

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