ZURICH (Reuters) - Ratings agency Moody's warned on Tuesday that immigration curbs in Switzerland will hit the economy and the country's key banking sector.
The view of Moody's mirrors concerns from business leaders in Switzerland after the decision to reintroduce immigration quotas, which has already drawn criticism and action from the European Union.
Businesses fret that the vote, backed by a margin of just 19,526 voters, threatens a Swiss economy that relies on the EU for nearly a fifth of its workers, a view Moody's echoed.
"The introduction of quotas on labour immigration could reduce housing demand, thereby exerting pressure on residential house prices, and potentially leading to a faster-than-anticipated slowdown in residential housing markets," Moody's said.
A crash in the Swiss housing market would hit smaller banks hardest: they hold the bulk of Swiss home loans, rather than the dominant UBS
Finance is big business in Switzerland: the sector accounts for more than 10 percent of gross domestic product, according to the banking lobby.
The housing market is of utmost concern to the Swiss National Bank, which has begun to explore alternative methods to cool rapidly rising house prices, after additional capital requirements for lenders did not do the trick.
In a country that depends heavily on foreigners in all sectors of the economy, economic growth in Switzerland is also at risk if the country can no longer draw on highly qualified foreign workers as it has in recent years, Moody's said.
"Moody's believes that this has helped mitigate the adverse effects of population ageing and skilled labour shortages, thereby positively contributing to employment and economic growth."
The SNB forecasts the Swiss economy, which has fared far better than the neighbouring euro zone, will grow by around 2.0 percent this year.
(Reporting by Katharina Bart; Editing by Alison Williams)