Switzerland

Largely resilient economic growth

The Swiss economy expanded by a robust 1.4% in 2025, unchanged from the previous year. This is somewhat encouraging as the small and open economy (foreign trade accounts for a very high 125% of GDP) is very exposed to external shocks. The generally sluggish global economic performance and recently introduced US tariffs (the country took in 19% of Switzerland’s exports in 2025) are resultantly weighing on Swiss real GDP performance. We are therefore forecasting a gradual slowdown in 2026. On that score, Q1 2026’s performance was disappointing as the economy grew by a lacklustre 0.4% year on year (y/y) before switching shifting into a much higher gear in April-June. Driven by the solid performance in the chemicals and pharmaceutical sectors which account for more than 50% of Switzerland’s exports, real GDP growth accelerated to 1.5% y/y, its highest level since 2021. On an equally positive note, private consumption will be supported by the robust labour market. The unemployment rate stood at a very low 3.1% in July 2026 and real wages increased by 1.6% in 2025, which was the fastest rate of expansion since 2020. After collapsing in March following the outbreak of the Iran War, consumer confidence rose for four consecutive months in the April-July period and is currently ranging only slightly below last year’s reading (minus 35 points versus minus 33 points one year earlier). This is also cause for cautious optimism regarding private consumption in 2026-2027, particularly given the fact that pensions are set to rise, too. Low interest rates and the robust housing market will also support the economy while fiscal spending has increased to a certain degree, which will impact positively on growth too. The biggest risks for the Swiss economy in the outlook period will come from developments abroad: geopolitical turmoil puts upward pressure on the Swiss franc (a classic haven currency), which might require constant central bank intervention at a time when ongoing defragmentation of international trade is also creating headwinds for Switzerland’s export industries.

Against the backdrop of lower inflationary pressure, the Swiss National Bank (SNB) cut rates from 1.75% in June 2023 to 0.0% in mid-2025. Unlike the ECB, the SNB did not increase its key policy rate in the aftermath of the outbreak of the Iran War as the energy price shock was much smaller in Switzerland than in the neighbouring eurozone. Inflation temporarily spiked from 0.1% in early 2026 to 0.6% in both April and May before moderating to 0.4% in July. Switzerland is shielded against price increases on global energy markets for two reasons. First, the strong franc keeps import price inflation at bay. Second, unlike in some other European states, oil and gas do not feature prominently in the country’s electricity mix which is split into 60% hydroelectric, 30% nuclear and only 0.5% hydrocarbons. However, as domestic transportation costs depend on oil prices, inflation is set to rise somewhat in 2026-27 compared with 2025, but will nonetheless stay comfortably towards the lower end of the SNB’s target range of 0%-2%, thereby reducing the likelihood of interest rate increases. This should also have positive effects on corporate investment activity, but a high degree of geopolitical uncertainty will counterbalance some of these effects for the foreseeable future.

At the same time, corporate insolvencies have risen sharply in recent quarters. In 2025, insolvencies spiked by 54%, reaching a new record high of 9,314 cases. That said, recent changes in insolvency regulations which now force public creditors such as tax and customs authorities or social security providers to launch proceedings earlier have played a crucial role in the trend as many insolvencies are transpiring earlier. Unfortunately, data for January to June 2026 shows that the 2025 trend is likely to continue: corporate bankruptcies rose by 43% in H1 2026, thereby highlighting an unusually high level of credit risk in the country. Except for the construction sector, all other industries reported more failures.

Public debt is low and the current account surplus sizeable, albeit shrinking

Unlike in most other developed markets, public debt stocks and fiscal balance are not a source of concern for Switzerland. As a result of the “Relief Package 27”, a cost-cutting measure introduced to lower federal spending in areas such as decarbonisation, education, integration and development aid, the federal budget foresees another surplus in 2026-2027. Defence and the government pension system will see higher spending in the forward period with pension spending being impacted by demographic change. In addition, following a successful referendum in 2024, pensioners will benefit from the introduction of a thirteenth monthly installment each year, the first of which will be paid in December 2026. Mainly thanks to higher-than-expected corporate taxes on profits in the pharma industry, Switzerland’s public accounts will see a structural surplus, which will also enable a smaller-than-initially-planned increase in the VAT rate from 2028. In contrast to the average government debt stock in the eurozone which stood at almost 90% of GDP in Q2 2026, Switzerland, thanks to its solid budget policies, has a public debt burden of less than 40%, a rate that is likely to drop further in the outlook period.

Furthermore, Coface’s excellent country risk rating for Switzerland of A1 is also underpinned by its sizeable and durable current account surplus. The primary income balance (e.g., net income from investments abroad and cross-border workers) and the services balance structurally post deficits. In addition, a persistent deficit exists on the secondary income (transfer) balance, which is the result of foreign employees who work in Switzerland sending home a part of their income. In Q2 2026, 1.9 million workers in Switzerland had a foreign passport. This equates to almost 35% of the workforce (up from 25% in 1991). However, these deficits are more than compensated for by the large surplus in goods trade. In this context, the chemicals and pharmaceutical sectors are crucial to the country’s external accounts as they generate 53% of goods exports. While the strong franc, geopolitical risks and the introduction of trade barriers will chip away at the current account surplus going forward, it is expected to remain above 6% of GDP in 2026-27.

The existence of ample Swiss assets abroad thanks to persistent and consistent current account surpluses enables the country to enjoy a substantial positive net international investment position (CHF 974 billion, equivalent to 112% of GDP in Q1 2026), the size of which varies according to stock market prices and the USD/CHF exchange rate. Furthermore, the SNB’s sizeable foreign reserves also reduce risks.

Consensus keeps political risk low, but the Bilateral Agreements III with the EU still need ratification

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 President is elected from this group for one year and subsequently alternates. Since 1959, the composition of the Federal Council is arranged 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 since 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 late 2027 and the SVP is currently leading the polls with 29%, well ahead of the SP (18%) and the Center Party (15%).

Relations between Switzerland and the European Union have improved. The main problem stems from their trade agreements, which also include certain migration and employee protection rules. The Bilateral Agreements I and II of 2002 and 2005, and a total of 140 individual agreements currently apply. In 2008, negotiations began on an all-encompassing trade agreement that would summarise and update 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 (ECJ) as a dispute settlement forum that could limit Switzerland’s sovereignty was rejected. The preservation of the high level of wages and employee protection in Switzerland was a major bone of contention based on the fear of unbridled migration from the EU, as was the possible receipt of Swiss social assistance by EU citizens. Relations cooled, but negotiations resumed in 2023 and were finalised in late 2024 with a new agreement, dubbed “Bilaterals III”. The new agreement now includes a safeguard clause on migration. Free movement of persons between the EU and Switzerland may be restricted if it causes serious economic and social problems. If the EU does not agree to the restriction, a neutral arbitration court will decide the issue. 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 rule on the matter. It does not have to refer to the ECJ to interpret EU law.

However, the Bilaterals III treaty has not yet been ratified and a referendum is expected to take place in 2027. Most political groups and the influential business community are supportive of the agreement but the SVP, the country’s biggest party, opposes closer ties with the EU. The defeat of the “No 10 million Switzerland” proposal in a referendum in June 2026 aimed at capping the population size (which would have had repercussions on the free movement agreements with the EU) signifies that the anti-EU camp has lost some ground recently, but it is not a given that the Bilaterals III agreement would necessarily be accepted in a referendum. The Federal Council has therefore decided to unbundle the overall package and create four partial agreements (free movement of persons and the coordination of 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. In addition, there is uncertainty about whether the Bilaterals III approval would require a “double majority”, meaning it would not only have to be approved by the majority of voters but also by a majority of cantons, which would be more difficult to achieve.

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: August 2026