Switzerland might not lead Europe on average income (GDP), but it wins on cost, according to recent Eurostat data.
The nations leading on per capita GDP in 2020 were Luxembourg and Ireland. Average GDP per resident was 2.63 times the EU average in Luxembourg and 2.09 times in Ireland. Switzerland, came in third with GDP per head of 1.60 times the EU average.
However, on costs, Switzerland takes the lead with prices 1.59 times the EU average in 2020. Luxembourg is the fourth most expensive (1.29 times the EU average) and Ireland the seventh (1.20 times).
Switzerland’s costs stand out compared to its neighbours. Germany (1.11 times the EU average), France (1.09) and Austria (1,04), while above the EU average, are all cheaper than Switzerland. Italy (0.99) comes in a little below the EU average.
Areas where Switzerland is particularly expensive include education (2.75 times the EU average), health (2.27), housing and energy (2.06) and groceries (1.72). Grocery expenditure can be be reduced by shopping across the border or at the German supermarkets present in Switzerland. However, Switzerland’s high housing, health and education costs are difficult to avoid.
The reasons behind Switzerland’s high prices are largely structural. There is little competition in some sectors and Switzerland has seen relatively little of the online disintermediation seen in European nations such as France, Germany and Italy. Another problem is high-priced wholesale contracts thrust upon Swiss retailers, which leave little room for Swiss retailers to spare customers on price. Tariffs on the importation of some food items such as meats hit Swiss pockets too. It is sometimes thought that high Swiss wages are behind Switzerland’s high prices. However, significantly higher payroll taxes paid by employers in the surrounding nations often mean staff cost little more or even less in Switzerland than in nearby places.
It is worth noting that GDP is only one measure of income. On mean and median household income measures, Switzerland is ranked top. In 2020, the mean household income in Switzerland was EUR 50,643 (CHF 52,700), higher than in Luxembourg (EUR 43,688), Ireland (30,543), Austria (29,503), Germany (27,520), France (24,850) and Italy. Switzerland also led on median household income with EUR 42,967 (CHF 44,700). In Luxembourg (EUR 37,844), Austria (26,555), Ireland (26,250), Germany (23,460) and France (21,739) median household incomes were lower than in Switzerland.