SWITZERLAND, long regarded with envy as an economy with prosperity guaranteed for the industrious, is at last getting a taste of hard times. It may be difficult to believe but the Swiss economy is in recession. It could be that the legendary gnomes of Zurich are now casting envious glances at the Republic, basking in double-digit annual growth.

The Swiss Federal Statistics Office said this week said that gross domestic produce fell nearly 11 per cent in the second quarter, the sixth quarterly decline in a row and the fifth year of negative annual growth. Both exports and imports declined for the first time in three years and unemployment is at a historically high 4.5 per cent. Economists lay the blame on the strong Swiss franc, its value inflated by safe-haven demand linked to uncertainty about EMU.

Another major problem has been weakness in major export markets, like Germany, Italy and France.

The country is suffering from a slew of other problems, ranging from bad press relating to the role of Swiss bankers providing a haven for pillaged Nazi assets in the Second World War to a proposal by the cabinet this week that its farmers slaughter half a million cows to counteract the high incidence of BSE in the Swiss herd. Even Swiss cheese, a staple export product, has been sullied by the part State-owned Swiss Cheese Union undercutting EU competitors in a kickback scheme. The mountains are no barrier against the excesses of the brave new Europe.