Switzerland is seen as one of the most expensive countries in the world – especially by foreigners who come to visit. Zurich and Geneva are particularly expensive, and they regularly feature in lists of the top 10 most expensive cities in the world. But why is Switzerland so expensive? The short answer for that would be that it is a victim of its success.
Overvaluation of the Swiss franc
According to Switzerland’s Federal Office of Statistics price index, prices in Switzerland in 2021 were 60 percent higher than in the European Community. The Economist magazine’s Big Mac index shows the Swiss franc is overvalued in comparison to other currencies, which makes Switzerland even more expensive to foreigners. Neutral Switzerland is seen as a stable, safe haven for money in troubled times, which means its currency is in demand and rising in value. The Big Mac index compares how much a Big Mac costs in different countries. It also shows how overvalued the currency is in comparison to others. In January 2022, for example, the Swiss Franc was 20.2% overvalued against the U.S Dollar and 40.9% against the Euro. Tourists are often surprised at the prices in comparison to their home country. Bátyai Anna from Hungary says: “I was very surprised at the prices I almost felt like I was wasting my money.”
It‘s expensive for Swiss citizens too
Saving money as a Swiss citizen isn‘t easy. Housing and food are particularly expensive. A Big Mac in South Africa costs only $2.20, $5.70 in the U.S. and the most expensive ones are in Switzerland with a price of $6.70. It‘s also expensive to do online shopping. Swiss people are often prevented from ordering cheaper products online from abroad, because of the high customs charges. Some foreign suppliers even refuse to deliver products to Switzerland. That’s because they try to sell their products at a higher price and want to prevent people from choosing a cheaper option. Despite recent legislation to try and prevent this so-called “geo-blocking”, firms and individuals often have to buy from retailers or manufacturers who are local to Switzerland. Grocery shopping can also cost you a fortune. For example, Coke costs more in Switzerland than in any other country.
Switzerland wasn‘t always rich
Switzerland was not always so prosperous and expensive. Until the end of the nineteenth century, it was one of the poorest regions of Europe. Swiss historian and economist Jan Fröhlich of the Realgymnasium Rämibühl in Zurich says that after the first and second world war Switzerland became richer and richer because it didn‘t participate in the wars, so it suffered fewer losses than other countries. They also had a very business-friendly attitude during industrialization. Switzerland has a very good reputation in terms of money and security so many rich people put their money in Swiss banks or buy properties in Switzerland. That resulted in Switzerland getting even richer. As the country got richer the Swiss Franc became stronger because more people needed the Swiss currency instead of their own.
How Swiss people try to save money
Because even everyday items such as groceries are so expensive in Switzerland, Swiss people can get quite creative when they try to save money. They often cross the border to go shopping in neighboring countries, especially in Germany. This phenomenon even has a name: “shopping tourism” (Einkaufstourismus). Swiss people really like skiing and have some of the most famous ski resorts in Europe – but the Swiss themselves often go skiing in Austria or Italy because it costs a lot less. But the most radical solution is that of the international commuters. These are people who come to work in Switzerland but live in a neighboring country, and according to the Federal Office of Statistics there were more than 360,000 of them at the end of 2021. By doing this they can afford much more. With the salary they get in Switzerland they could maybe afford an apartment, but in the neighboring country, with the same amount of salary, they can afford a much bigger apartment or even a house.
If you want to know more about how and why Switzerland is so rich :
https://www.swissinfo.ch/ger/warum-ist-die-schweiz-so-teuer-/46890978
