Liechtenstein has the right ingredients to master the future

Mr Gitzel, the motto of this year's Entrepreneurs' Day is “20 years of courage for the future”. As an economic and financial expert, how do you view the coming months and years in light of the current global situation?

We are undoubtedly facing major challenges that must be overcome now. With Donald Trump in the White House, Liechtenstein and the whole of Europe are facing not only economic but also major political issues. Keywords here are trade disputes and the European security architecture. We must roll up our sleeves now and shed bureaucratic burdens so that we are not left behind economically. I am fundamentally an optimist and believe that we can overcome these challenges. 

What makes you so confident?

We are already seeing signs of movement in Europe and a wake-up call across the continent. A prominent example is Germany with its major infrastructure programme and increased defence spending. Europe seems to have understood that there is a lot at stake right now.

There are currently changes in many areas, from geopolitics to technology. Where do you see the biggest challenges?

Particularly in view of the latest developments in the US, but also in Europe itself, it is clear that a free democratic order cannot be taken for granted. That is why I believe that one of our most important tasks is to preserve and nurture our democracy. This also includes the proper use of social media. And, of course, political developments such as isolationism, deglobalisation tendencies and a lack of legal certainty also have economic consequences. Added to this are demographic and technological change, with artificial intelligence being a key word. And last but not least, climate change remains an issue. The wealth of topics shows that there is much to be accomplished in the coming years and decades.

Climate change and sustainability in particular seem to have taken a back seat again in light of the current crises. The issue seems to be far less present in the public eye than it was a few years ago.

I do not share the impression that Europe has strayed from the path of sustainability. However, in the past, the EU has tried to regulate a great deal and has perhaps neglected market economy aspects to some extent. I am confident that these will be given greater consideration in the future. A certain trend reversal is already evident. What is certainly taking place is a shift in priorities. However, this is also necessary due to the war in Ukraine, the new administration in the White House and the accompanying trade conflicts. 

Let's delve a little deeper into the topic of trade conflicts and their consequences. As an economic expert, how would you describe the current state of the global economy?

The global economy has been in trouble for some time. Many people forget that, from an economic perspective, we are still in the post-coronavirus phase.

What does this mean in concrete terms?

During the coronavirus pandemic, services such as eating out and travelling were often impossible or only possible to a limited extent. As a result, there was strong demand for consumer goods during the pandemic, which subsequently translated into high demand for industrial goods and ultimately boosted production. With the end of the coronavirus measures, demand for services such as holiday travel picked up again. Countries with a high share of the service sector in gross value added, such as Spain and Portugal, are benefiting from this. Meanwhile, industrial economies are still suffering in the post-coronavirus era. Trade conflicts are adding to the pain.

What is Liechtenstein's current economic position?

Liechtenstein basically has the right ingredients to master the future: innovative strength, a diversified economic structure and a high level of legal certainty. Nevertheless, Liechtenstein is also struggling in the current environment of weak global trade. Liechtenstein has been sailing close to the wind of the global economy, which is currently weak. In addition, the Principality is also feeling the effects of demographic change. This shows that there are a number of hurdles to overcome here too. 

Countries with a high proportion of industry are already under pressure. Now there is the threat of a trade conflict with the USA. What does this mean for Liechtenstein?

This is undoubtedly a challenging environment for a small, open economy. But we do not yet have an escalating trade conflict. Donald Trump quickly suspended the announced tariffs, and negotiations are currently underway. I am confident that a mutually acceptable solution will also be found with Europe and that the consequences of the conflict will not be so serious.

But certain negative effects are already being felt, such as uncertainty?

Uncertainty is there and is naturally having an economic impact. Investments are currently being put on hold because companies do not know what the future holds. Private households are also feeling uncertain. This will weigh on growth in the short term, even if the tariff discussions are resolved amicably. On the other hand, the good news is that the latest round of leading economic indicators do not point to any serious slumps and have even improved in some areas recently.

Let's return to the political level. How do you see Europe positioned in view of the challenges it faces?

Europe has always functioned well when the Franco-German axis has functioned well. Unfortunately, this has not been the case in recent years. I have high hopes for the new German government. The fact that the new Chancellor, Friedrich Merz, travelled directly to Paris and Warsaw sends a clear signal that Europe can count on Germany's stronger foreign policy commitment in the future and, above all, that relations with France will improve again.

Another important factor is Europe's competitiveness compared with other major economies such as China and the United States. What needs to be done in this regard?

Company surveys show that excessive bureaucracy is a major problem for businesses. Europe needs to free itself from this to a certain extent. We need fewer laws and the courage to repeal existing ones. What is also needed is more risk capital. Innovation must lead to products. The US is miles ahead of us in this respect.

What options does the Liechtenstein government, which only took office a few months ago, have in this difficult environment?

Legal certainty and stability are key features of the country. Liechtenstein has also chosen a very good path in the past with regard to dialogue with neighbouring countries and European integration through EEA membership. This has enabled Liechtenstein to combine the best of both worlds. On the one hand, it has gained access to the European single market, and on the other hand, through the currency and customs union with Switzerland, Liechtenstein has not only gained access to the Swiss franc but also to the Swiss domestic market. All of these are key factors in Liechtenstein's success. It is important to maintain them in the future. Demographic change and the already difficult availability of skilled workers will not only be a concern for local companies, but also for the new government. Liechtenstein must be an attractive place to work. Politicians must create the right conditions for this. 

How important will factors such as legal certainty and stability be in the future in view of the upheavals that are looming?

In my view, these have always been important assets, and I think they will become even more important in a world undergoing major upheavals.