By Dave Graham
KNONAU, Switzerland, May 22 (Reuters) – Since 1990, the population in the Swiss village of Knonau has more than doubled, driven by an economic boom in one of the country’s most business-friendly and prosperous cantons, Zug.
The concerns voiced by some residents there that housing and public infrastructure are being overwhelmed are central to the wider arguments behind a referendum next month on whether Switzerland should approve a population cap.
The proposal championed by the right-wing Swiss People’s Party (SVP) stipulates that Switzerland’s permanent resident population must not exceed 10 million before 2050, and threatens to end the country’s freedom of movement accord with the EU.
“10 million would be a disaster,” said Erika Hermann, 63, a former sales worker in the village who supports the initiative. “It’s too many people for Switzerland.”
BUSINESSES OPPOSE A POPULATION CAP
The population is already above 9 million and at current rates would pass the proposed cap well before 2050.
If the initiative passes on June 14, it could upend trade ties with the EU, which is easily Switzerland’s most important trade partner.
Some critics liken the referendum to Britain’s Brexit vote to leave the bloc a decade ago as freedom of movement underpins Swiss access to the European single market.
The ruling Federal Council opposes a population cap. Last month it launched a plan to make it harder for foreigners to acquire real estate, citing the referendum.
Business groups say it could choke off access to labour for Switzerland, where more than one in four residents are foreign nationals. More than 82% of them are from Europe, the lion’s share from Italy, Germany, Portugal and France.
While Swiss voters often respect the argument that a proposal would be bad for business, polls show this one could pass.
The residents in Knonau who Reuters spoke to about the referendum pointed to the village’s transformation by construction and the pressure on public services due to population growth. Those expressing a firm view on the proposal tended to support it, but a few said it would hurt Switzerland.
POPULATION ‘KEEPS SPIRALLING UPWARDS’
The prosperity of Switzerland, which is not an EU member but is tied to it through various treaties, hinges to a considerable degree on open market access to the rest of the world.
And its wealth and higher wages have enabled it to attract top talent from other countries.
Knonau has seen its population leap almost 150% to 2,514 since 1990. That compares with a rise of 36% for Switzerland and 8% for the EU.
“It just keeps spiralling upwards, at some point there must be a stop,” said Peter Zuercher, 77, a retired technician in Knonau who backs the initiative. “We need a certain amount of immigration, but what’s happening now is too much.”
Part of the attraction is the proximity to the canton of Zug, where the corporation tax rate is well below Britain, France, Italy and Germany, and over 2.7 percentage points beneath the Swiss average. Income tax is also far lower.
REAL ESTATE IN ZUG OUTSTRIPS MAJOR CITIES
Many of the inhabitants of Knonau, just inside Canton Zurich’s border, work in Zug but live in the village because it is cheaper, said Knonau local Martin Iten, a 54-year-old solar panel installer.
Observing that wealthy newcomers are pushing up prices, he said his family home was due to be torn down and turned into apartments with underground parking. He is considering moving abroad to live off the proceeds.
Over the past generation, Zug’s economy has grown faster than any other canton except for pharma hub Basel. It has also pushed up Zug’s house prices.
According to real estate consultancy Wüest Partner, homes in the town of Zug are now dearer than in Geneva, where prime real estate was worth more than in Singapore, London, New York, Tokyo and Paris in Knight Frank’s 2026 wealth report.
“If you could buy a house 20 years ago, you’ve won the lottery. For everyone else it’s a disaster,” said Luzian Franzini, leader of the Green Party in Zug, which he likened to “the Switzerland of Switzerland”.
The Greens oppose the population initiative.
Zug’s SVP finance director Heinz Taennler said the canton was partly a “victim of its own success”, creating what he called “exorbitant” demand for homes. But he said house prices were far more influenced by location and accessibility than tax levels, citing a 2017 study.
“We need to be careful, and that’s exactly the problem, that people from Zug can no longer afford homes in their own canton,” he said.
(Reporting by Dave Graham;Editing by Alison Williams)
Comments