Cheap capital, scarce demand: Switzerland’s economy at zero.
On 18 June 2026 the Swiss National Bank held its policy rate at 0% and the Federal Expert Group cut Swiss growth for the year to 0.9%. The binding constraint on Swiss firms is set out in the SNB’s quarterly company talks, and it is not the cost of capital.
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On 18 June 2026 the Swiss National Bank left its policy rate unchanged at 0%, where it has stood since 20 June 2025. The same day, the Federal Government Expert Group on Business Cycles reduced its forecast for Swiss GDP growth in 2026 to 0.9%, a rate SECO describes as well below the historical average. With effect from the day before, 17 June, the European Central Bank’s deposit facility rate had risen to 2.25% — its first increase since September 2023.
Taken together, they describe one condition rather than three. Swiss companies finance themselves against a policy rate of zero, the gap with the euro-area policy rate has widened to 225 basis points, and output is still expected to grow at a below-average rate. The question is not whether monetary policy is loose, but why loose money is producing so little activity. The SNB’s own company talks address it directly.
Two June assessments described the same economy from different ends
The SNB set out its reasoning on 18 June. Inflation had risen from 0.1% in February to 0.6% in May, an increase the bank attributes mainly to higher prices for oil products. Its conditional forecast, which assumes the policy rate remains at 0% throughout, puts average annual inflation at 0.6% in 2026, 0.6% in 2027 and 0.7% in 2028. The SNB expects growth of around 1% this year and around 1.5% next.
SECO’s Expert Group, whose forecast was finalised on 8 June, published its figures the same day: GDP growth of 0.9% in 2026 against 1.0% in the March round, 1.6% in 2027, inflation of 0.6% in both years, and unemployment averaging 3.1% in 2026 after 2.4% in 2024 and 2.8% in 2025.
The revision is almost entirely imported. The Expert Group raised its technical assumption for Brent crude to USD 93.5 a barrel in 2026, from USD 73.7 in March, cut expected growth in global demand to 1.2%, and lowered euro area and German growth to 0.6% each. Higher energy prices, it notes, are expected to bring elevated inflation internationally and more restrictive monetary policy among European trading partners — as the ECB’s move on 17 June reflected.
Cheap money is reaching companies; it is not what is holding them back
On 16 July the SNB published the summary of the discussion behind the June decision. Various measures of inflation expectations, the Governing Board recorded, point to real interest rates in Switzerland currently being negative and below the long-term equilibrium real rate, and transmission was described as working. Excess liquidity, positive again for the first time since mid-2025, has risen over the past year, alongside robust growth in lending and in the broad monetary aggregates. Monetary conditions had eased since March, principally because the franc depreciated as interest rate differentials widened.
The price of capital confirms it. SECO’s assumptions put SARON, the Swiss franc money-market reference rate, at 0.0% on average across 2026 and 0.2% in 2027, with ten-year Confederation bonds yielding 0.5%. Chairman Martin Schlegel summarised it at the June news conference: “Our monetary policy continues to have an expansionary effect.”
The constraint sits in unused capacity, not in the cost of money
Six days later the SNB published the field report behind it. Business cycle signals 2/2026 aggregates 243 talks that the bank’s delegates for regional economic relations held with company managements across Switzerland between 15 April and 2 June.
Technical capacity utilisation has changed little and remains below normal overall: significantly below in manufacturing, slightly below in services, somewhat above in construction. Staffing is adequate overall and, in manufacturing, considered somewhat too high; vacancies have been relatively easy to fill for several quarters, because firms reduced headcount earlier and more specialist staff are available as a result.
Investment plans follow directly from that. Companies plan to increase investment volumes significantly, with pent-up demand for replacement investment in manufacturing and construction, additional spending on automation and digitalisation, and IT infrastructure in services. Capacity expansion, the report states, is not a priority. The July summary compresses it: with the utilisation of technical capacity often remaining below normal, hardly any manufacturing companies are planning to expand capacity.
The national accounts show the same in aggregate. Investment in fixed assets and software fell 0.8% in 2025 and is forecast to grow 0.3% in 2026 — revised down from 0.7% in March — before rising 2.0% in 2027. Exports of goods are expected to fall 0.7% this year after growing 3.6% in 2025, with foreign trade subtracting 0.2 percentage points from GDP growth. Firms in the SNB sample report a reluctance to invest among European customers in particular. Demand remains strong for transport and energy infrastructure, data centres and defence equipment, while the German automotive industry has shown only isolated signs of recovery.
Margins are being held by cost control rather than by cheap financing
The same round shows where the pressure falls. Profit margins remain solid overall on the delegates’ assessment, but the way they are held differs by sector. Companies expect both purchase and sales prices to rise over the coming year, but sales prices by less. Higher energy and transport costs are raising the price of imported intermediate goods, and some firms report that competitive pressure leaves them unable to pass the increase on. Construction firms can largely pass higher fuel and material costs on to customers. Manufacturers told the delegates they can keep margins stable only by continuously reducing costs, citing US tariffs, sluggish demand in some areas and the strong franc despite its recent weakening.
The shock remains imported rather than domestic. The SNB’s trimmed-mean core measure stood at 0.5% in May. Companies’ inflation expectations for the next 6 to 12 months rose to 1.2%, from 0.7% a quarter earlier, while their three-to-five-year expectations moved only from 1.1% to 1.2%. Expected average wage growth is 1.3% for 2026, after 1.6% in 2025, and around 1.2% for 2027.
With SARON assumed at zero across the year, a franc saved on inputs or earned on volume weighs more in the accounts than a franc saved on interest.
The decisions that remain open to a management team
The environment is given. The response is not.
- Separate capacity investment from cost investment. The return on additional capacity depends on orders that are not yet there, while the return on automation and replacement equipment depends on unit costs already visible. That is the split the SNB’s sample has made.
- Negotiate term and availability, not only price. The euro area’s policy rate changed direction inside twelve months. Committed facilities and maturity profiles are the part of a financing package that a later rate move cannot rewrite.
- Write an input-cost mechanism into quotations and multi-year contracts, tied to a published energy, freight or metals reference, rather than absorbing increases that some firms, on the SNB’s evidence, cannot pass on.
- Treat the recruitment window as temporary. Vacancies are relatively easy to fill, more specialist staff are available after earlier headcount reductions, and expected wage growth is 1.3%; construction, however, still reports a shortage of specialists.
- Review currency cover against the appreciation case rather than the current level: the SNB announced an increased willingness to intervene in March and has maintained it, citing the risk of a rapid and excessive appreciation of the franc.
The dates, and the one indicator worth following
Three dates belong in the planning calendar. SECO’s forecast rests on the technical assumption that US import tariffs remain broadly at current levels; the Expert Group notes that the existing 10% tariffs, introduced under Section 122 of the US Trade Act, may be maintained for a maximum of 150 days without congressional approval, a period expiring on 24 July 2026. The SNB’s two remaining assessments this year fall on 24 September and 10 December. And every quarter, Business cycle signals publishes the line that matters most for capital spending: technical capacity utilisation.
That indicator is likely to move before the policy rate does; SECO’s assumptions have short-term rates barely moving, at 0.0% this year and 0.2% next. Capacity investment returns when order books justify it, which SECO expects during 2027: GDP growth of 1.6%, investment in fixed assets and software of 2.0%, goods exports of 3.5%.
An economy at zero is not an economy without decisions. It is one in which the cost of money has stopped being the variable that separates one company from another.