Zurich, 28 August 2018 – The Cantonal Competitiveness Indicator (CCI) 2018 published by the UBS Chief Investment Office GWM provides information about the long-term growth potential of Swiss cantons. Zug, Zurich and Basel City are Switzerland's three most competitive cantons. Aargau, Schwyz, Lucerne and Vaud also have above-average growth potential.
Solid growth prospects are evident in a dense group of 11 cantons, with Nidwalden at the top and Obwalden bringing up the rear. The places in between are occupied by cantons from Eastern Switzerland and Espace Mittelland as well as Basel Country and Geneva. The alpine cantons of Graubünden and Valais, as well as the canton of Jura, fall into the group with low relative competitiveness.
Industry with improved competitive positioning
Competitiveness does not change overnight. The position of 14 cantons has not shifted since the last edition of the CCI in 2016. But relative growth prospects have improved for Schwyz and Schaffhausen, both of which have made up three places. Bern and Ticino have both improved by two positions. The cantons of Obwalden, Nidwalden, Freiburg and Appenzell Innerrhoden have fallen by two or more places.
The positive prospects in the Swiss high-tech industry have led to a shift in the relative strength of the economic structure: one of the key factors in competitiveness. Industrial cantons with above-average diversity, such as Schaffhausen, Thurgau and Solothurn, have benefited from this in particular.
Tax Proposal 17 reshuffling the deck
Relative location costs for companies are much the same as they were in 2016. But altered cantonal tax rates on profits in the context of Tax Proposal 17 should result in changes. According to current data, Geneva and Vaud would become considerably more attractive from a tax perspective, while the relative competitiveness of Zurich and Aargau would fall. In any case, cost factors such as office rents, energy prices, wages and taxes for natural persons should become more important. The losers would be those Central Switzerland cantons that have lured companies to settle in them with aggressive low-tax policies. St. Gallen and Thurgau in Eastern Switzerland and Solothurn and Ticino would benefit from the cost factors that will become the new focus. They would be among the winners.
Cantonal Competitiveness Indicator (CCI) 2018
The CCI analyzes eight thematic pillars that include 55 variables weighted and aggregated so that each canton earns a score between 0 and 100 for each pillar. An average score is calculated from the eight pillars for each canton and scaled so that the highest cantonal score is 100.
A higher CCI score for a canton implies higher competitiveness relative to the other cantons.
Interpretation of the CCI
The CCI provides information about the relative long-term competitiveness of a canton. It describes a canton's potential to improve its economic performance sustainably. Cantons with high relative competitiveness should enjoy stronger growth in the long term than the Swiss economy as a whole. By contrast, cantons with low relative competitiveness can expect below-average growth.
A low CCI score only means that a canton has below-average growth opportunities relative to the other cantons, not that it necessarily has low absolute growth potential. Since many highly regarded studies rank Switzerland among the most competitive countries in the world, even low-CCI cantons are still competitive in an international comparison.
Competitiveness calculated at the cantonal level also conceals the various regional differences within the cantons. The map on page 3 shows a regionalized view of CCI 2018 featuring the 106 economic regions defined by the Federal Statistical Office.
Strong regions in the top-placed cantons
Even in a regional comparison, the region of Zug retains the highest growth potential. All regions in the top-ranked cantons of Zurich, Basel City and Aargau are among the 25 best-placed regions in Switzerland. Thanks to their central location, they are particularly easy to reach and have a large catchment area.
Huge differences within individual cantons
In contrast to the relatively homogeneous top-placed cantons, others like Bern and Vaud reveal big internal differences. Their regions with the best growth prospects, Bern and Lausanne, are in the top third of the regional comparison. They have a strong economic structure and are easy to reach. At the same time, their weakest regions are among the weakest in Switzerland relatively, partly due to their limited accessibility and small catchment area.
Higher regional competitiveness in cantons with lower growth potential
In cantons with below-average growth potential, the regional centers are considerably more competitive than the other regions in these cantons. Examples include the regions of Chur in the canton of Graubünden, Lugano in Ticino and Neuenburg in the canton of the same name. These regions stand out thanks to a better economic structure.
The eight pillars of competitiveness
At the heart of the CCI is an eight-dimensional analysis of a canton's strengths and weaknesses. The multi-faceted view enables a detailed analysis of the relative strengths and weakness of a canton's economy and serves as the basis for region-specific strategic decisions. Businesses and investors can use this information to choose where to locate, and it helps cantons prepare themselves to face impending challenges. The profiles of the two most populous cantons of Zurich and Bern serve as examples:
The profiles of all cantons can be viewed in the Cantonal Competitiveness Indicator report at the following link: www.ubs.com/kantonalerwettbewerbsindikator-en.
UBS Switzerland AG
Dr. Katharina Hofer, Economist and Project Manager CCI, CIO Swiss & Global Real Estate
Tel. +41 44 234 48 03, firstname.lastname@example.org
Dr. Matthias Holzhey, Economist, CIO Swiss & Global Real Estate
Tel. +41 44 234 71 25, email@example.com
Claudio Saputelli, Economist, Head of CIO Swiss & Global Real Estate
Tel. +41 44 234 39 08, firstname.lastname@example.org