BERN: The UBS Swiss consumption index was up in May 2015. The index increased from 1.67 to 1.73 driven in part by an increase in new car sales. The strong franc is dampening sales of some retailers however, who have to compete with lower retail prices across the border in neighbouring eurozone countries.
High priced imported items bought by retailers at recent exchange rates, such as new cars are often cheaper in Switzerland than in nieghbouring Eurozone countries because of Switzerland’s relatively low rate of VAT. VAT on cars is 20% in France, 19% in Germany and 22% in Italy. In Switzerland it is 8%. Add to this the increased spending power of those earning Swiss francs and the bounce in new car sales is not surprising.
