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Banking

Bond Outlook May 30th

Switzerland is enjoying a cheap currency, a property boom and expanding labour. We draw parallels with Spain, UK and Japan and seek a general conclusion about labourforces everywhere.

Bond Outlook [by bridport & cie, May 30th 2007]

Geneva is to Switzerland as Spain is to the euro zone. In Spain foreign buyers of secondary residences and retirement homes have pushed up property prices in an environment of low interest rates over which the Spanish themselves have negligible influence. Replace foreign home buyers with multi-nationals and financial service firms setting up in Geneva, and the ECB with the SNB, and the parallel is striking. The bubble has burst in Spain, but looks far from bursting in Geneva.

 

The property boom in Geneva is one aspect of an economy which is enjoying a privileged relationship with the EU, but still maintains its own currency and interest rates. To the above parallel with Spain can be added another, more favourable, one – that with the UK.

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