Government offers fresh boost to economy

Keystone

The government has announced a second series of financial measures amounting to SFr700 million ($606.7 million) to stabilise the economy.

The lion’s share of the stimulus package will be directed at transport. The measures are expected to be approved by parliament next month.

They are necessary, the government said, as the economic outlook has worsened since the first phase worth SFr341 million was introduced in November.

The rescue package echoes what is taking place around the world, notably in the United States, which could spend up to $1 trillion.

The European Union has also agreed to pour €200 billion into member state economies.

Speaking at a news conference in Bern, Economics Minister Doris Leuthard defended the government’s response to the crisis saying the package would be sufficient.

“When one takes into account the direct investments this will unleash, as well as tax breaks, the money flowing from unemployment insurance [into the economy] which is an automatic stabilising factor, and investments by the cantons, then we come to 1.5 per cent of Gross Domestic Product and that is adequate in a European context,” she explained.

Export risk

The seven-member cabinet also announced on Wednesday its intention to extend the scope of the State Export Risk Insurance to protect exporters from lack of liquidity. A change to the law will be required, which Leuthard said would be limited to two years.

Along with the other moves the cabinet has increased the length of time that employers can impose shorter working week. Firms can now reduce their employees’ hours for a period of up to 18 months. The previous limit was 12 months.

Leuthard described the state investment as targeted and timely. The state coffers in 2009 will finance a series of projects in rail and road transport, regional development and applied research. Some SFr80 million is to be spent on the environment and energy.

The remainder of the funding will be made available to modernise buildings and boost tourism marketing.

“It’s important that we have projects that will create jobs and can be implemented quickly,” Leuthard told swissinfo. “We also want every region in the country to benefit… and it’s psychologically important for people to see that the construction sector is moving ahead.”

Criteria

To secure funding, projects will have to meet three criteria. The aid should benefit the economic sectors and regions expected to be hit hardest in coming months. They must achieve their results quickly and have a fixed term.

The announced measures received mixed reviews from the largest political parties.

The biggest, the rightwing Swiss People’s Party, rejected the package outright, calling for tax cuts instead.

The centre-left Social Democrats criticised it as being “far from effective” and for not being “comprehensive” enough. The Greens said it was not innovative and said any stimulus package had to take into account the protection of the environment.

Cool-headed

Only the two centre-right parties, the Radicals and Christian Democrats, said they were satisfied.

The Radicals said the government had remained cool-headed and had chosen not to put an excessive burden on the federal budget.

A spokeswoman for the Christian Democrats said her party was convinced the measures would be effective and there would therefore be no need for a third package, which would be decided by the cabinet in June.

The unemployment rate in Switzerland is currently at a two-year high of 3.3 per cent and recession has been forecast for 2009.

swissinfo with agencies

Key facts

Latest state stimulus package:

Road and rail – SFr390 million
Regional development – SFr100 million
Environment and energy – SFr80 million
Research – SFr50 million
Renovating state buildings – SFr40 million
Tourism – SFr12 million