A senior official at the State Secretariat for Economic Affairs (Seco) has predicted increased unemployment in Switzerland due to the strong franc and insecure global economy.

“If the exchange rate stays at this level, we have to expect a large amount of production relocated abroad and redundancies, particularly in the machine industry,” said Serge Gaillard in an interview with the newspaper NZZ am Sonntag.

“Negative effects will also be seen in tourism and the banks – in all sectors exposed to international competition,” he added.

Seco previously warned of growing unemployment from the autumn when the euro reached a value between SFr1.20 and SFr1.30. Since then the eurozone currency has dropped under SFr1.10.

Such an exchange rate will mean “severe consequences for the Swiss economy”, Gaillard said.

In an effort to halt the rising value of the franc, the Swiss National Bank (SNB) reduced official interest rates on August 3 by 50 basis points to a target range of 0-0.25 per cent.

In a news release announcing the move, the bank said it considered the franc to be “massively overvalued at present” and it was aiming for the three-month Libor at “as close to zero as possible”.

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