Populist moves make Switzerland unpopular

SWITZERLAND attracted the fewest companies in at least a decade last year after the vote to limit immigration and the start of a revision of corporate tax breaks.

The number of foreign firms setting up in Switzerland dropped 8% to 274, the Conference of Cantonal Economic Directors said in a report this week. The new arrivals created 780 jobs, down 21% from 2013.

The world’s most competitive economy is losing one of the motors that helped contribute to its five successive years of economic growth.

Companies are increasingly reluctant to enter a country that has given shareholders power to veto executive pay packages just as the central bank forecasts a slowdown in the economy.

“We have a spot on our record with the mass immigration initiative and the say on pay,” said Rudolf Minsch, chief economist of business lobby Economiesuisse.

In the past two years, Swiss voters have accepted one popular initiative that aims to limit immigration and another that gives shareholders a say on managers’ compensation.

Switzerland is adding to uncertainty by overhauling corporate tax.

The end of the franc’s cap against the euro in January is making Switzerland more expensive than countries that compete for globally mobile firms, including Singapore, Ireland, the UK and the Netherlands.

“Low taxes were key to compensate for the massively high- er costs of doing business in Switzerland,” said Reto Savoia, managing partner on tax matters at Deloitte in Zurich.

“If you take top-line tax costs, Ireland is about the same as Switzerland, and costs of doing business there are lower.”

Companies are still coming to Switzerland. But foreign firms cite obstacles to bringing in capital and employees.

“Newcomers really have to be convinced that Switzerland is more attractive than alternative locations,” said Savoia.

Voter support for limits on immigration has called into question the availability of talent. “We are hearing the anxious question: will we manage to get the necessary employees? ” said Eric Jakob of the Swiss State Secretariat for Economic Affairs. — Bloomberg