Switzerland is a mountainous country in central Europe, entirely surrounded by the EU. It has a tradition of direct democracy, with citizens voting on policy through referendums.
Switzerland's relationship with the European Union is governed by a complex mechanism of bilateral treaties. At the end of 2024 the two sides concluded negotiations on the "third bilateral package", a deal that would synchronise these treaties into a single coherent framework. The agreement was made public in mid-2025 and is expected to reach parliament in winter 2025.
The deal aims to update five existing treaties covering free movement of people, the removal of technical barriers to trade, land transport, air transport and agriculture. It adds new internal-market agreements on electricity and food safety, plus co-operation in education and research. Switzerland would have to contribute €375m a year to the EU's cohesion fund for poorer members. When the EU adopts laws affecting areas covered by the agreement, Switzerland would have to incorporate them into its own legislation.
The deal must ultimately be approved by a referendum. Many Swiss worry it amounts to passive membership of the EU and would restrict their centuries-old tradition of direct democracy by making much legislation off-limits for referendums. Most voters want the referendum to use the double-majority procedure, requiring both a national majority and a majority in most of the cantons—making approval harder, since smaller cantons tend to be conservative.
Switzerland introduced a constitutional "debt brake" in 2003 after it was backed by 85% of voters in a referendum. It is part of a small group of rich economies—alongside the Rhineland peers Germany and the Netherlands—that have kept public debt low. Switzerland has accumulated pension assets over 100% of GDP.
The hard-right populist Swiss People's Party (SVP) is the biggest party in parliament. The SVP opposes the EU deal and may try to delay the referendum until after general elections, scheduled for October 2027. The Swiss parliament meets for just three weeks each quarter.
The SVP has launched a referendum initiative, "No to a Switzerland of 10 million", which would let the government close its borders. Parliament is expected to vote by early 2026 on whether to field its own version.
Switzerland negotiated a protection clause in the EU deal that would allow limiting immigration, but only in case of "disproportionate economic consequences" linked to the deal—a weaker safeguard than the government had sought.
Switzerland introduced simplified procedures to deal more quickly with nationalities whose asylum claims were unlikely to succeed. Claims from those groups fell by half within 18 months.
Switzerland is responsible for about a third of global gold refining. It typically exports around $4.5bn-worth of gold to America each year, though this surged to $12.5bn in 2024 and $48bn in the first five months of 2025 as investors sought safety amid uncertainty over American policy. The country exported $116bn-worth of gold in 2024 but also imported $100bn-worth, meaning its role as a refiner can make trade flows look deceptively large.
Switzerland's trade surplus in goods with America reached $48bn in 2024, equivalent to about 5% of Swiss GDP. In August 2025 Donald Trump imposed tariffs of 39% on Swiss exports, though exemptions for gold and pharmaceuticals bring the effective rate to about 12%. Novartis and Roche, two Swiss pharma companies, received letters from Mr Trump demanding prices in line with the lowest in comparable economies; drug tariffs remain at zero pending American decisions on global pharma policy.
Switzerland's specialities—pharma, gold, luxury items and high-end machinery—fit American demand, which accounts for half of Switzerland's overall trade surplus with the world. Thermoplan, the sole supplier of coffee machines to Starbucks, is considering a partnership with an American firm to lighten the tariff burden. Switzerland's currency is overvalued by about 50%, according to The Economist's Big Mac index.
The country's founding oath, the Rütlischwur, dates to August 1st 1291.
Save a little money each month and at the end of the year you'll be surprised at how little you have.