Germany is Switzerland's largest trading partner, and with the former having been in a state of political limbo over the last two months as the Social Democrats and Christian Democratic Union attempted to form a new 'grand coalition,' Economiesuisse chief economist Rudolf Walser told Swissinfo that the return of stability in Germany should have a positive effect on Switzerland.

"It is good news that Germany has a new government with a programme focusing on crucial economic reforms," he noted.

"This will positively influence Switzerland due to the weight of trade between the two countries. It will strengthen confidence among consumers and investors in Switzerland that the recovery already underway here will continue in 2006," Mr Walser added.

Walser also stated that the reforms eventually agreed upon by the coalition will go some way towards restoring the German economy to a state of growth, although he conceded that they do not go nearly far enough to provide the stimulus that many observers believe the country needs.

There is the promise (but no more than that) of corporate tax reform by 2008, including a cut in business tax by several percentage points from the current level of 25%, and abolition of the differing tax treatment of small and large companies. But with VAT to be raised from 16% to 19% from January 1st, 2007, and a 3% income-tax surcharge for high earners, taking the top rate of income tax to 45%, most businesses were left disappointed by the new deal.

What's more, with key government portfolios split between the left-leaning SPD (which has the foreign, finance, labor, justice, health, transport, environment and development ministries) and the conservative CDU (economy, defence, interior, agriculture, family and education portfolios), it is by no means certain how long this new found stability will endure.