Switzerland is stalling and this affects us all

This morning, I fully intended to write about technology and how it provides opportunities for the over 40’s to redesign their lives and financial prospects way beyond what most can imagine.

But then going through my newsfeeds I was hit by some astonishing news which just had to take precedence. So the technology opportunities piece will have to wait a day or two…

Whilst this is about Switzerland, in my view, it is news of global significance. 

I have some connections with Switzerland. Not least is that my younger brother lives and works there, employed by a major US multinational. So I have spent a reasonable amount of time in that beautiful and prosperous country, soaking up the spectacular landscape, the historic buildings and the clean and efficient environment. A couple of years ago on my last visit, when the US and UK were already in recession, the Swiss would just shrug and say, ‘What recession?’ 

Then almost simultaneously this morning, I caught two news stories. The first was that UBS is cutting 10,000 jobs as it looks to drastically shrink its ailing investment bank. 2,500 jobs will go in Switzerland and 7,500 in the UK and US.

UBS is Switzerland's biggest bank and announced the plans as part of its third-quarter results which revealed a loss of 2.2 billion Swiss francs (£1.43bn) yes that’s right £1.43 billion!, compared to a profit of 1.02 billion (£0.67bn) in the same period last year.

UBS said the result for the July-September period was damaged by a one-off charge of 3.1 billion Swiss francs (£2bn) linked to the restructuring of its investment banking division and a debt-related charge of Fr863 million (£574m).

So possibly, just possibly, these results are one-offs due to the restructuring.

But then, this news was supplemented by more news that Swiss manufacturing is entering a slowdown due to reduced demand in the Eurozone. Here’s an extract from the Fox News report:

Employment prospects in Switzerland's industrial and banking sectors are likely to worsen in coming months as faltering economic growth in the Euro zone damps demand for Swiss goods and services, according to a survey released Monday. The employment indicator compiled by the KOF economic institute has held below the growth threshold in the third and fourth quarters of the year, suggesting a "stagnation of the Swiss employment trend in the coming quarter, with the industrial and banking sectors hardest hit”, it said Monday.

Read more: http://www.foxbusiness.com/news/2012/10/29/swiss-job-outlook-sours-as-weak-eurozone-hits-demand-survey/#ixzz2Amf6cqqS


When a previously immune and secure economy like Switzerland falters, I think it’s a sure sign that we are in deepening trouble.

So why is this news of global significance? Because it points to at best further stagnation and at worst a meltdown of the global economy.
 
The big Swiss banks and manufacturers are global businesses. Their employees are all over the world. And when these businesses struggle, so do their employees; and the businesses where those employees spend their incomes are damaged too. It’s a trickle down effect.

It gives me no joy at all to report this news. The one thing I do know though is that the survival strategies I describe in my report here are becoming ever more relevant to more and more people.