Germany’s distress: Switzerland needs the sick man of Europe to recover

As the German economic miracle gives way to stagnation and a real estate crisis, can Switzerland remain immune to the challenges facing its giant neighbour?

Swiss success in Europe has long depended on economic success in Germany, which arguably remains Switzerland’s most important economic and political partner. Critical to this close exchange is market access granted by the myriad bilateral treaties between the EU and Switzerland in selected sectors of mutual interest. But problems over the German border are causing Swiss alarm bells to ring. “We heavily depend on the economic relationship (with Europe), especially with Germany – there is an impact,” says Patrik Peyer, co-head of NKF’s corporate and M&A team.

“Switzerland is still working on its difficult relationship with the EU,” explains Daniel Hayek, managing partner of Prager Dreifuss. “Given the importance of Swiss exports to the EU (72%) and to Germany (52%), this relationship is crucial.” Christian Oetiker, his counterpart at Vischer, adds: “Our ties to Germany are very close. It’s usually an inbound market. A cooling off in Germany is an issue for the Swiss economy.”