OECD urges Switzerland to pursue tax and pension reforms

The OECD now expects Switzerland’s economy to grow by 2% in 2026, a sharp upgrade from its June forecast of 1.1%. The revision follows a stronger-than-expected second quarter and gives Bern a more favourable economic backdrop as it weighs difficult structural reforms.

The Paris-based organisation delivered its warning on September 15, 2026. Switzerland has managed repeated shocks through cautious macroeconomic policy and its debt brake, the OECD said. That record has helped preserve confidence in the public finances and supported the country’s position among the world’s most competitive economies.

The report also set out the vulnerabilities behind the upbeat forecast. A renewed appreciation of the Swiss franc could hurt exporters by making Swiss goods more expensive abroad. Trade restrictions and geopolitical tensions pose additional risks to a country whose economy depends heavily on foreign markets.

OECD Secretary General Mathias Cormann said Switzerland must use its current momentum to secure fiscal sustainability, expand productivity beyond its strongest companies and industries, and increase the supply of housing. The recommendations put taxes, pensions and land use at the centre of the country’s next economic debate.

Exports equal about 78% of Swiss GDP, leaving the country unusually exposed to shifts in global demand, trade rules and exchange rates. The European Union takes almost 40% of Swiss shipments, while the United States accounts for more than 20%, according to the OECD.

That concentration gives Switzerland powerful commercial links, but it also leaves manufacturers, pharmaceutical companies, machinery producers and other exporters sensitive to policy decisions taken abroad. The OECD urged Bern to preserve access to the European single market as voters prepare to consider new treaties with the EU.

The organisation also called for wider diversification of trading partners. A stronger franc would add pressure by reducing the value of overseas sales when earnings return to Switzerland. Trade impediments could disrupt supply chains and raise costs for firms that depend on international markets.

The warning arrives as Switzerland debates how closely it should align with the EU while protecting its regulatory autonomy. For companies in Basel, Geneva, Zurich and the industrial cantons, the issue is practical: market access, predictable rules and manageable currency risks shape investment decisions. The OECD’s message is that domestic reform and external economic policy now reinforce each other.

The OECD wants Switzerland to tie the retirement age more closely to rising life expectancy, a proposal that would reopen one of the country’s most sensitive political disputes. The organisation argues that an ageing population will increase spending pressures and make the existing pension framework harder to sustain.

The recommendation follows a familiar demographic reality. People are living longer, while the share of older residents is growing relative to the working-age population. That places more weight on pension contributions, public budgets and the households that support elderly relatives.

An automatic link to life expectancy would change how future retirement adjustments are made. It could strengthen the finances of the pension system, but it would also raise questions about physically demanding work, regional differences in health and the ability of older workers to remain employed. Any reform would face scrutiny from trade unions, employers and political parties across the country.

The OECD did not present pension reform in isolation. It connected longer working lives to a broader fiscal strategy that includes stronger tax revenues and more productive growth. Switzerland’s debt brake has limited spending flexibility, making early decisions on pensions more important as demographic costs rise.