After the end of the German government, a lot is unclear: When will new elections take place? Who will rule after that? This uncertainty also affects Switzerland, because Germany is one of our most important trading partners. Economics professor Klaus Wellershoff explains what the government crisis means from a Swiss perspective.
Klaus Wellershoff
Economist and economic consultant
Open the people box. Close the people box
Klaus Wellershoff (born 1964 in Wilhemshaven/D) is a former chief economist at UBS and now works as an economic consultant in Zurich. He is also an honorary professor of applied economics at the University of St. Gallen.
SRF News: What predominates for you – are you more relieved that there is now clarity, or are you worried about what may come next?
Klaus Wellershoff: It seems certain that there will be new elections in Germany soon, even if it is still unclear when they will be held. However, the elections will once again not produce a clear majority; there will probably be lengthy coalition negotiations again. And we don’t know today what direction the new government program will take.
The uncertainty has increased.
The current government is unable to act and there is no support program for the German economy in sight. This means the uncertainty has increased. We now have to expect a tragedy that will last for months.
Switzerland is closely linked economically to Germany. Do you expect changes here?
No – the connections are too close for that. And what depresses consumers in Germany usually also depresses consumers in Switzerland. Germany is and remains by far the most important foreign region for Switzerland’s economic development.
For Switzerland, the government crisis in Berlin is a stupid development, especially at this moment.
What does this mean in connection with the government crisis in Berlin?
Demand from Germany for Swiss products will initially decrease because the upswing in Germany tends to be postponed. In addition, it could be difficult for Switzerland to make its political concerns – such as the internal market and relationship with the EU – heard in Berlin during the months-long election campaign. This is a stupid development for Switzerland, especially at this moment.
So what does the Swiss economy have to prepare for?
She must expect less growth. We currently have full employment but not overheating, which is why inflation is low. And if the economy in Germany had done as well in recent years as that of Italy, France or the USA, economic growth in Switzerland would have been up to 1.5 percent higher.
Depending on the election results, the franc could become stronger – that would weigh on growth.
And: Depending on what comes out of the elections in Germany, there is a risk that the franc will become even stronger against the euro. Then we would have low inflation in Switzerland, but it would weigh on growth.
What would the Swiss economy want?
Clarity. But it seems unlikely that things will get better after the new elections in Germany. The easiest thing would be a grand coalition between the Union and the SPD, but according to current surveys, such a coalition would not achieve the necessary absolute majority. We also know of a large coalition from the time before the traffic light government – not only did it not break any ties, it probably caused the current mess in Germany.
So stability would be the most important thing?
The greatest wish of the Swiss economy is that Germany begins to grow economically again. But that will probably only be the case when there are stable political conditions.
The interview was conducted by Susanne Stöckl.
German Government Crisis: A Swiss Perspective
So, the German government has decided to throw in the towel—tossed out like a stale pretzel at Oktoberfest! With new elections looming and a political landscape as clear as mud, the Swiss are rubbing their hands together nervously. After all, Germany is like that reliable old friend who always pays for the drinks but is suddenly running out of cash! Economics professor Klaus Wellershoff is here to untangle the financial mess.
Klaus Wellershoff
Economist and economic consultant
Klaus Wellershoff (born 1964 in Wilhemshaven/D) is a former chief economist at UBS and now works
as an economic consultant in Zurich. He is also an honorary professor of applied economics at the University of
St. Gallen.
SRF News caught up with Klaus, who explained that while there’s a light at the end of the tunnel (new elections), it sure feels like a train’s about to come barreling through. The uncertainty is palpable! He says: “The uncertainty has increased.” Wow, talk about straightforward—Klaus should be in PR instead!
The uncertainty has increased.
But fear not, dear Swiss. Wellershoff reassures us that the economic ties between Switzerland and Germany are too close to sever with a political snafu. Yet, he warns that when the German economy sneezes, the Swiss catch a cold. It’s like a twisted version of economic dominos—first, one falls, and suddenly you have a chain reaction that could lead to Switzerland sitting in a corner and sobbing into its fondue!
For Switzerland, the government crisis in Berlin is a stupid development, especially at this moment.
Ultimately, it’s like Klaus is saying Switzerland is facing a “Code Red” situation. With a raging demand from Germany’s sleepy economy, he predicts that exports may take a hit. That’s like ordering a tasty Swiss chocolate fondue at a restaurant only to find out they’re out of chocolate—heartbreaking!
And what does Klaus think Switzerland should prepare for? Brace yourselves, folks: “Expect less growth!” As we do our best to manage expectations, it seems the Swiss economy has won the ‘The Low Growth Lottery’. Isn’t that just lovely? Still, full employment sounds cheery until you realize that it’s more like everyone being stuffed in a too-small fondue pot!
Depending on the election results, the franc could become stronger – that would weigh on growth.
Oh, and let’s pile on some more challenges: if the German elections tumble out poorly, our beloved Swiss franc might bulk up like Schwarzenegger in the ‘80s. Those who thought a strong currency is always good are clearly not in the Eurozone! All that low inflation will be crushing Swiss growth like a heavy yodeler at a concert.
So what does the Swiss economy want? “Clarity,” says Klaus. But clarity seems as far away as a Swiss cheese with no holes. He shrugs his shoulders and notes that a stable coalition might just defuse the situation but let’s face it, that sounds about as likely as a German beer festival without the beer!
The greatest wish of the Swiss economy is that Germany begins to grow economically again.
In the end, it seems the Swiss economy is rooting for its German counterpart like a football fan at a penalty shootout: “Don’t miss!” As we sit back with our chocolate, cheese, and dubious hopes, here’s to hoping for stability in Berlin. After all, without it, we might just have to start scoring average beers instead of pints!
The interview was conducted by Susanne Stöckl. Stay tuned for more updates, folks—but let’s pray our economic rollercoaster doesn’t take too many wild turns!
After the abrupt end of the German government, a wave of uncertainty looms over the nation: When exactly will the new elections be held? Who will take the reins of power following this political upheaval? This state of affairs inevitably affects Switzerland, as Germany stands as one of our most vital trading partners. Esteemed economics professor Klaus Wellershoff sheds light on the implications of the government crisis from a Swiss perspective.
Klaus Wellershoff
Economist and economic consultant
Klaus Wellershoff (born 1964 in Wilhelmshaven, Germany) is a former chief economist at UBS, currently serving as an economic consultant based in Zurich. In addition, he holds a position as an honorary professor of applied economics at the University of St. Gallen, showcasing his extensive expertise in the field.
SRF News: What predominates for you – are you more relieved that there is now clarity, or are you worried about what may come next?
Klaus Wellershoff: It seems certain that new elections in Germany will occur soon, although the precise timing remains elusive. However, past voting patterns suggest that these elections are unlikely to yield a clear majority; thus, we can expect drawn-out coalition negotiations once again. The potential direction and policies of the new government remain speculative at this point.
The uncertainty has increased.
The current government is paralyzed and there are no immediate support measures for the German economy on the horizon, further intensifying the atmosphere of uncertainty. We may be facing protracted challenges for several months to come, creating a difficult landscape ahead.
Switzerland is closely linked economically to Germany. Do you expect changes here?
No – the connections are too robust for significant shifts. Generally, economic woes that affect German consumers will also cast shadows over Swiss consumers, demonstrating the interconnected nature of our economies. Germany remains the most consequential foreign region influencing Switzerland’s economic trajectory.
For Switzerland, the government crisis in Berlin is a stupid development, especially at this moment.
What does this mean in connection with the government crisis in Berlin?
Demand from Germany for Swiss products is likely to dip initially, as any economic upswing in Germany appears to be postponed. Moreover, it could prove difficult for Switzerland to voice its crucial political concerns—such as matters regarding the internal market and its relationships with the EU—during the protracted election campaign, exacerbating the challenges Switzerland faces at this critical juncture.
So what does the Swiss economy have to prepare for?
She must brace for a slowdown in growth. Presently, Switzerland enjoys full employment without signs of overheating, resulting in low inflation rates. Had Germany’s economy performed comparably to the likes of Italy, France, or the USA in recent years, Switzerland’s economic growth might have seen an increase of up to 1.5 percent.
Depending on the election results, the franc could become stronger – that would weigh on growth.
Additionally, outcomes from the elections in Germany could lead to a strengthening of the Swiss franc against the euro. While this scenario would keep inflation low in Switzerland, it may also hinder economic growth, underscoring the delicate balance needed in these uncertain times.
What would the Swiss economy want?
Clarity is the paramount desire. Yet, the likelihood that conditions will improve post-elections in Germany appears grim. An ideal scenario would involve a grand coalition between the Union and the SPD; however, current polls indicate such a coalition may not secure the requisite absolute majority. We recall the grand coalition prior to the traffic light government—not only did it fail to resolve existing issues, but it arguably contributed to the current political turmoil in Germany.
So stability would be the most important thing?
The overarching wish of the Swiss economy is for Germany to reestablish economic growth. However, that resurgence will likely hinge on achieving stable political conditions within Germany, which currently remains uncertain.
The interview was conducted by Susanne Stöckl.
>Expect less growth! Given the current environment of uncertainty and the potential fallout from the German elections, it is likely that Switzerland will face a slowdown in economic growth. While we currently enjoy a stable labor market, the overall growth outlook is far from optimistic.
Depending on the election results, the franc could become stronger – that would weigh on growth.
Moreover, we must consider the impacts of currency fluctuations. If the result of the German elections leads to a stronger Swiss franc, it may put additional strain on our growth prospects. A strong franc can hinder export competitiveness, making it more challenging for Swiss businesses to thrive in international markets.
Now, what does Switzerland truly desire in this tumultuous time? “Clarity,” is Klaus’s hope. Given the complexity of the situation, achieving clarity seems as elusive as finding Swiss cheese without holes! We can assure ourselves, though, that a stable coalition in Germany could alleviate some of the prevailing uncertainties; however, that would be about as likely as a German beer festival without the beer!
The greatest wish of the Swiss economy is that Germany begins to grow economically again.
the Swiss economy is fervently wishing for a turnaround in Germany’s economic fortunes. Just like a football fan rooting for their team during a nail-biting penalty shootout: “Don’t miss!” As we navigate these uncertain waters, let’s hope for stability in Berlin, because without it, we might find ourselves reaching for less-than-satisfying alternatives—whether that’s in our beer selections or in our economic forecasts!
Stay tuned for further updates on this story, and let’s all hope our economic rollercoaster doesn’t take too many wild turns!
The interview was conducted by Susanne Stöckl.
