Andreas Gerber: "The Swiss economy will look different after the coronavirus crisis"
Andreas Gerber, Head of SME Switzerland at Credit Suisse, takes an initial look at the federal government's COVID-19 bridging credit facilities and explains why he has great respect for entrepreneurs in Switzerland. He also ventures a forecast of how the Swiss economy will change in the long term.
The coronavirus crisis has turned life upside down in many places. What is your everyday life like these days?
My professional life is always hectic, but the last few weeks have been much more intense. We saw at an early stage that Swiss SMEs were going to run into liquidity bottlenecks and we worked hard to find a solution at federal government level. The program was developed and implemented together with the government and other banks within a few, very hectic days. Meanwhile, I can once again devote a lot of time to our clients and to our strategic duties. They need our support these days more than ever, whether it’s to deal with their current situation or to discuss future prospects. I also manage an organization with around 500 employees. Here, too, new challenges are emerging as a result of the crisis.
You mentioned the government's bridging credit facilities. What is your conclusion so far, two months after their launch?
It was definitely the right decision to set up a support package to provide the Swiss economy with liquidity quickly and easily. Around a fifth of all businesses in Switzerland have so far made use of a bridging credit facility. Beyond the immediate provision of urgently needed liquidity, I also see the program as a strong signal and commitment to entrepreneurship in our country. This approach to the solution has also brought Switzerland a great deal of international recognition.
What is the liquidity primarily used for?
In discussions with clients, we repeatedly stress that liquidity is the air that companies breathe. In the current crisis, it is simply a matter of maintaining operations, i.e. keeping on top of ongoing costs (loan repayments, wages, etc.), paying for materials and services, or financing ongoing projects. We have also noticed that some SMEs are applying for credit facilities in order to secure a certain buffer for the coming months. Within the framework of careful liquidity planning, this makes perfect sense for the companies.
How do you experience entrepreneurs in Switzerland in the current crisis?
I have great respect for entrepreneurs in this country. During my career to date, I have witnessed various crises that have challenged the Swiss economy, most recently the Swiss franc shock and the financial crisis. Even now, I am impressed by how professionally and nimbly they are handling this unprecedented situation. The majority of SMEs are proving their resilience in the face of crisis and their flexibility to adapt quickly to these new circumstances. This says a lot about the solidity of our economy.
Even before the crisis, everyone was talking about digitalization. Now we are experiencing a veritable surge in digitalization. What is your advice to entrepreneurs in this respect?
It is indeed the case that we’re probably experiencing another key moment in the history of digitalization. For once, however, this is not primarily driven by technical achievements, but by the human factor: In recent weeks, even people who were previously reluctant to use digital channels have changed their behavior – whether it be ordering food, using video calls or contactless payment. This leads to new demands on clients and opens up new business opportunities. I recommend that all entrepreneurs take a look at the current situation and ask themselves to what extent they can align their company's business model to the new reality in the medium term.
How do you expect the Swiss economy to develop in the coming months?
It's extremely difficult to make a forecast, and it depends on the sector and what the specific competitive situation looks like. I believe that the coming quarters will be challenging for the majority of companies will require them to be exceedingly agile. Provided that the situation worldwide continues to calm down and normalize, we can, however, expect a catch-up effect and above-average economic growth in certain areas next year. Though it will surely take some time before the economy gets back to its pre-pandemic levels.
And what changes in the economy do you expect in the long term, even if we one day have the virus under control with a vaccination or medication?
The Swiss economy will look different after the coronavirus crisis. A completely new awareness of dependencies is currently developing in our economy and society, including the associated risks. This will have consequences for the economy, politics, and probably also for society. For example, businesses are likely to ask themselves whether it might not make sense to bring certain parts of the value chain back under their own control and closer to Switzerland in geographical terms. New opportunities will open up and new business models will emerge. A positive ray of hope in these challenging times!
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