Those were the days when Andreas Bourani’s catchy tune was played up and down in 2014, just in time for the World Cup in Brazil. The inevitable happened; Germany became world champion, the sky was the limit. Collective ecstasy, in short ” cheers for us”.  One year later, in 2015, the slogan was “We can do it.” Germany’s motto years had reached their peak.

Times have changed a lot since then. One pandemic and one undigested economic crisis later, with an ongoing war on our doorstep, abrupt rifts in economic performance, innovation, technological progress and political upheaval are revealing themselves within Europe. The old continent’s draught horses are limping under the burden placed upon them. Increasing tendencies appear primarily in the areas of regulation and new legislation. The danger of some states degenerating into so-called satrap economies can hardly be minimized.

And yet they do exist, the quiet, unagitated, successful and no less self-confident creators in Europe. Switzerland can count itself among them. Together with most Scandinavian countries, we are on the sunny side. In Switzerland, we don’t talk, we just do. Quietly and orderly. Because the bigger and louder the sounds, the bigger the problems. Unfortunately, we have observed this comparative too often in the recent past.

Major divergences are also evident in European inflation rates. In Switzerland, the inflation rate in August was 1.6%, while in the euro zone it was 5.3%. In Germany, the figure is as high as 6.1%. So how does Switzerland manage to maintain such a low inflation rate compared to its neighboring countries?

As is often the case, economic development is based on a variety of factors. One important factor is certainly the Swiss franc – the safe haven, as it is often referred to in times of crisis. Since its low point in spring 2021, the Swiss franc has appreciated by more than 15% against the euro. This has discreetly absorbed some of the imported inflationary pressure.

However, in addition to the Swiss franc as a kind of inflation protection wall, Switzerland’s independent energy mix also contributed to a relatively mild inflation development. In 2021, around 80% of Switzerland’s energy demand was covered by renewable energies (68% hydropower and 11% from photovoltaics, wind, small hydropower and biomass). In addition, another 19% came from nuclear energy. Only 2% is still attributable to predominantly fossil energy sources. However, the energy mix changes from year to year, as electricity production from hydropower in particular is strongly influenced by precipitation levels.

A comparison with Germany – the largest economy in the European Union (EU) – comes to mind. Germany’s higher dependence on fossil fuel natural gas (13%) is obvious. In 2020, natural gas was even the most important energy source with a share of 31.2%. The share of Russian gas deliveries to Germany was 55% in 2021. Consequently, a rapid substitution had to take place as a result of the boycott, which ultimately resulted in expensive liquefied natural gas deliveries from the USA. We omit the topic of nuclear energy, which is very controversial in Germany, in favor of reading length, even though it would be no less significant. The end product of this political balancing act resulted in fueling German inflation.

The Swiss National Bank (SNB) towers over the Swiss economy, pulling the strings strategically in the background and also recently determining the monetary policy of the Swiss Confederation with the greatest possible foresight. In addition to its role as Switzerland’s monetary policy compass, it also acts as a multi-billion dollar investor in the international financial markets. Calls for a division of responsibilities and the establishment of a separate investment fund – along the lines of the Norwegian sovereign wealth fund – are growing louder, especially in view of the high foreign currency holdings of CHF 800 billion.

But even without the existence of a separate sovereign wealth fund, the SNB is a boon for Switzerland and its entities. Through the usually annual payouts in the billions of francs to the federal government and the cantons, the population ultimately benefits as well. In each of the last two years, six billion Swiss francs (the maximum possible payout amount) flowed to the public purse. But not so this year: Due to the sensitive loss of a good CHF 130 billion in the past financial year, no distributions were made. This was last the case in 2014. However, this should by no means obscure the SNB’s most important secondary activity. In the past, the SNB’s securities portfolio contributed to the positive development of Switzerland’s prosperity through its profit distributions – and this will probably continue to be the case in the future.

The factors described above influence our daily lives. Consequently, they affect our satisfaction and desire for stability as well as security. And according to surveys by the Federal Statistical Office (FSO), almost three quarters of the Swiss population feel happy most or all of the time. In the past, only Austria, Ireland and some Nordic nations such as Finland, Norway and Denmark were able to keep up with such values.

Only 3.9% of the total Swiss population rate their health as poor or very poor, fewer than in any other country in Europe. In the EU, the figure is 8.8%, and in Germany it is as high as 12.4%, the fifth-highest value in Europe. Even if these are merely snapshots specific to the study, causal relationships between cultural, political and economic conditions cannot be ignored.

Relying primarily on existing intra-European trading partners is likely to pay off in the long run in a world subject to constant change. Even for an agile country like Switzerland, challenges remain to be overcome. But thanks for the confidence, Andreas – cheers for Switzerland. We can do it!