Macroeconomics

The recent appreciation of the Swiss franc has sent shockwaves through Swiss firms, resulting in job losses and lower research budgets. But viewed long-term, Switzerland’s export-driven economy has adapted remarkably well to a strong currency, according to a government report published on Tuesday.

This is the overall conclusion of five studies, commissioned by the State Secretariat for Economic Affairs (Seco), released on Tuesday. They examined the aftermath of the so-called Swiss franc shock, which was triggered when the Swiss National Bank (SNB) ended its longstanding ceiling of CHF1.20 to the euro almost three years ago. That move suddenly made Swiss exports 10% more expensive and cut Swiss economic growth to 0.6% in 2015 from 1.8% a year earlier.

During the last few months some central banks have done things which I applaud, while others have done things which I find both incomprehensible and incompetent. In the current climate, it’s easy to misread the markets.

The Swiss National Bank on Wednesday revealed the country’s new ten franc note, which will go into circulation on October 18th. The latest in the new series of banknotes that is being issued in stages, the ten franc note follows the 50 franc and 20 franc notes that entered circulation in April 2016 and May 2017 respectively.

It may be that nominally independent central banks are not really as independent as they seem.

Most big eurozone banks are well braced for possible future interest rate rises, the European Central Bank said Monday after running dozens of them through a stress test. On a scale running from a top mark of 1 to the lowest of 4, 60 out of 111 banks scored 1 or 2 in the test, the ECB said.

For the first time, the stress test examined how sudden changes in interest rates will affect banks’ income and the value of their assets. Of the other banks, 34 received a mark of 3 and 17 scored a 4.

The Swiss National Bank’s holdings of foreign currency touched a record 724.4 billion francs ($739 billion) in September, an increase of 1 percent from August. The franc slipped against both the euro and the dollar last month, two currencies in which the central bank holds a large portion of its reserves. Still, the franc remains strong, requiring the SNB to stick with its policy of negative rates and occasional interventions, President Thomas Jordan said earlier this week.

Switzerland’s KOF Economic Institute downgraded its growth projection for this year because of weak performance in the first half.

In the Autumn Economic Forecast, released Thursday, the institute lowered growth outlook for 2017 to 0.8 percent from 1.3 percent. The think tank said prospects for GDP growth were much gloomier than it had appeared in June.

Car sales in the UK were down 9.3 per cent in September. The figures that have just been released are worse than the situation in the last six months, that has seen a constant decline.

Chris Bosworth, director of strategy at Close Brothers Motor Finance, commented about the situation blaming Brexit, and therefore the uncertainty in the EU, for this decline.