The Swiss cantons with the most competitive economies revealed
Zug has been named the most economically successful Swiss canton in the 2023 edition of the Cantonal Competitiveness Indicator. The ranking calculates the economic potential of each canton based on factors like taxation, housing, jobs and consumer prices.
Zug, Basel-Stadt and Zurich the most competitive Swiss cantons
Published by the UBS Chief Investment Office, Global Wealth Management, the Cantonal Competitiveness Indicator is a report that looks at various factors - grouped under eight thematic pillars, like “cost environment”, “labour market” and “housing availability” - to calculate the long-term competitiveness of each canton, given as a score out of 100.
A score of 60 or above indicates that a canton has “solid” competitiveness, while 75 and above is considered “highly competitive” and 90 and above is “top”. A score between 50 and 60 is classed as “moderately competitive”, while a score below 50 is considered “uncompetitive”.
According to the 2023 issue of the index, Zug is the canton in Switzerland with the highest long-term growth potential. The economic powerhouse of Switzerland was closely followed by Basel-Stadt in second place and Zurich rounding out the top three. These were the only three cantons labelled by UBS as having “top” competitiveness.
Fourth place went to Aargau, followed by Schwyz, Basel-Landschaft and Vaud. These cantons were considerably behind the frontrunners, but still rated as having high competitiveness by UBS. In the midfield, 10 cantons were given a mark of “solid” competitiveness, while five received a “moderate” score and four - Uri, Graubünden and Valais in the mountains, and Jura - were deemed to have little growth potential.
New corporate tax rates will affect rankings
According to Katharina Hofer, the UBS economist responsible for the study, developments in Swiss economic policy are having major implications for the cantons’ standings. For instance, she said that while previously cantons were compared based on their taxes, “inter-cantonal tax competition is losing its importance due to the acceptance of the minimum corporate profits.”
This is due to the fact that Switzerland in a referendum in June voted by 78,5 percent to follow an international agreement spearheaded by the OECD to impose a minimum tax rate of 15 percent on international companies. This will have a major impact on cantons like Zug that have maintained corporate tax rates well below the 15-percent threshold to attract businesses.
Hofer also said that some cantons were being held back in their competitiveness by the interrelated problems of skilled worker shortages and housing shortages. She suggested that some of the “weaker” cantons could improve their growth prospects by focusing on these two major factors.
For more details on the study, visit the UBS website.