The financial sector: a stable mainstay of the Swiss economy
In its latest study, BAK Economics estimates that the financial sector accounts for 5.4% of jobs (234,600) and around 9.3% of gross value added (CHF 70.9 billion) in Switzerland. Banks and insurers thus contribute 7.6% of public revenues (CHF 7.8 billion). Furthermore, significant indirect effects on other industries mean that the financial sector’s overall impact is much greater. This year’s edition of the BAK Economics study also sheds light on the sector’s importance for the real estate market.
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Other industries benefit from the financial sector
Some 234,600 people (full-time equivalents) were directly employed by banks and insurance companies in 2022, generating gross value added of CHF 70.9 billion. The banks alone accounted for CHF 41.3 billion of this. The financial sector also provides significant impetus for other industries via demand for upstream services, including IT and consulting, as well as consumer spending by employees. These indirect effects added up to CHF 30.2 billion in additional value added by 213,600 employees outside the financial sector in 2022, which is equivalent to 91 extra jobs in other industries for every 100 financial sector jobs. The financial sector’s activities therefore resulted in overall gross value added of CHF 101.1 billion from a workforce of some 448,200 people.
The financial sector is a key player on the real estate market
The financial sector performs many functions on the real estate market: it grants mortgage loans to fund property purchases, lets out residential and commercial properties, offers real estate funds and manages real estate portfolios that are vital to both private and occupational pensions.
Lending is part of the banks’ core business. They make up approximately 95% of the total market volume of CHF 1,209 billion. Insurers and pension funds, meanwhile, are more likely to own properties and thus act as landlords. Around 14.3% of rented and leased residential and commercial properties, measured in terms of market value, are owned by representatives of the financial sector.
Outlook: banks’ gross value added falling in the short term but with high rebound potential
BAK Economics forecasts a 3.4% fall in real gross value added for the banks in 2023. Key indicators of net income, such as the nominal increase in interest margins, are not factored into this calculation, whereas the decline in service exports and the expected drop in assets under management – and thus the related commission income – are heavily weighted. BAK Economics expects a significant rebound in 2024, with growth reaching 4%.
The financial sector is a major source of tax revenues
Compared with other sectors, the financial sector makes a disproportionately high contribution to Swiss tax revenues. It paid a total of CHF 18 billion in tax in 2022, which equates to almost 12% of the overall federal, cantonal and communal tax take. Some CHF 7.8 billion of that figure was directly attributable to taxes on corporate earnings and earned income at banks and insurance companies. The indirect tax effect is made up of tax revenues from other sectors (CHF 2.7 billion) and from transaction taxes in the financial sector (CHF 7.4 billion), specifically value added tax, stamp duty and withholding tax.