Lake Geneva on the crest of a business wave

The economy around Lake Geneva is flourishing Keystone

The Lake Geneva region is undergoing an unprecedented business boom, outperforming the Zurich region over the past ten years, says a Swiss research group.

Yahoo! and Cadbury Schweppes are two of the latest additions to the long list of multinationals that have chosen to set up European headquarters to take advantage of the region’s dynamism and attractive business conditions.

According to a recent study by BAK Basel Economics, the Lake Geneva region, stretching from Geneva to Montreux, has managed to pick itself up after the recession in the 1990s to register consistently above-average growth over the past ten years.

“The dynamism of the Lake Geneva region has accelerated and surpasses that of the rest of Switzerland,” said the report’s authors.

From 2000 to 2007, it grew year-on-year by 2.1 per cent, rising to three per cent from 2004. During the same period, exports increased by 83 per cent, compared with 53 per cent for the national average, and 25 per cent for cantons Zurich and Aargau.

And the region continues to attract highly qualified staff: in 2006, 37 per cent of the working population had a university education, compared with 30 per cent for Zurich.

Although the Greater Zurich Area remains Switzerland’s economic driving force, accounting for 20 per cent of gross domestic product (GDP), Lake Geneva, generating 15 per cent of GDP, is fighting back.

“It’s a very pleasing situation with amazing figures – something we haven’t experienced in the past,” Christophe Reymond, secretary-general of the Vaud employers’ association, told swissinfo.

“There has been a clear change over the past five years since the entry into force of the bilateral treaties and free movement of individuals.”

Every week, the regional business association, which has more than 25,000 members, registers around 40 to 50 newcomers, small and large.

In March, the British confectionary company Cadbury Schweppes announced it was moving its European headquarters to the small town of Rolle between Geneva and Lausanne, joining Yahoo!, Chiquita, Nissan and Cisco Systems.

Selling points

So what has made the region such a big hit with international companies?

“Taxes are certainly a major factor,” said BAK Basel Economics researcher Ueli Grob. “But the rates in the Lake Geneva region are actually higher than other parts of Switzerland.”

The availability of highly qualified people at the Federal Institute of Technology in Lausanne, local universities and other research centres, established business networks, and the region’s international outlook also play a major role, he added.

The Lake Geneva region has long been popular with the British, Michael McKay, from the British Swiss Chamber of Commerce, told swissinfo.

“But companies that relocate value the stability and openness of the Swiss economy; high standards of local and private international education, the central location, and good airline connections,” he said.

Attractive, competitive rates of corporate and personal tax, and a very high standard of living, also play a major role, he added.

Rosy but several clouds

The business report reveals the huge influence of the tertiary sector on the local economy, in particular the banking, business and service sectors. The chemical-pharmaceutical and watchmaking industries have also seen major growth over recent years.

“The region is a global finance sector and important hub for the trade in raw materials,” said the report’s authors.

Low tax rates have compelled many trading houses to move to Geneva. According to the Geneva Trading and Shipping Association, there are 6,000 people working in commodities trading, shipping, and related services in Geneva, compared with the city’s 8,500 UN staff and 19,000 bankers.

The business outlook for the next few years looks fairly rosy, said Grob.

“We assume that the banking sector will recover in the mid-term and growth in the watchmaking industry should continue,” said the researcher. “But overall growth will be weaker then in Zurich, where 20 per cent of the local economy is dependent on the finance sector.”

But despite the healthy situation, there are still several clouds on the horizon.

“We have a few transport infrastructure worries, in particular rail transport and the motorway between Lausanne and Geneva. And there is a need for more international schools,” said Reymond.

McKay agreed that infrastructure had to be extended and improved given the population growth over the past ten to 15 years.

“There is a space problem in Geneva, especially residential accommodation, which is less the case in canton Vaud. Geneva needs to address the problem of land space to ensure further commercial development,” he added.

swissinfo, Simon Bradley

Lake Geneva region

Growth: from 2000 to 2007, the Lake Geneva region grew annually by 2.1%, just behind Basel, rising to 3% from 2004. This compares with 1.5% for the Greater Zurich Area.

Gross domestic product per person: Vaud (SFr70,024), Switzerland (SFr66,703).
Exports: from 2000 to 2007 exports increased by 83%, compared with 53% for the national average, and 25% for the Greater Zurich Area.

In 2006, 37% of the Lake Geneva region’s working population had a university education, compared with 30% for Zurich and 27% for Switzerland.

Over the past ten years, the population of cantons Vaud and Geneva has grown by 100,000 (+10%), surpassed only by cantons Fribourg, Zug and Schwyz (+15%).

Since 1990, the Federal Institute of Technology in Lausanne has almost doubled in size from 3,700 to 6,500 students (+73%), while Zurich’s Federal Institute of Technology has increased by 18% from 11,000 to 13,000 students.

Over the past three years, cantons Vaud and Geneva have managed to reduce their debt by more than SFr5 billion.

Geneva airport recorded about 11 million passengers between April 2007 and April 2008 (+10%).