Swiss parliament may not back franc: paper

ZURICH: Switzerland's parliament may not back a government plan to allocate 2 billion Swiss franc ($2.54 billion) to help cushion the impact of the record-strong currency in its current form, a newspaper reported on Saturday.

The franc has gained some 20 percent against both the euro and the dollar in recent months, as investors worried about debt problems in the euro zone and the United States seek a safe haven.

Swiss officials are under increasing pressure to take action as the franc's gains start eroding economic growth and corporate profits.

The Swiss government, which consists of representatives of the five largest political parties, this month proposed the plan to foster research and innovation, temporarily lower social security contributions, and support exporters and the tourism industry, which have been particularly hard hit by the soaring currency.

Yet, the scheme still has to be voted on by parliament, and the German-language TagesAnzeiger reported several influential parliamentarians did not support the aid package.

Both Urs Schwaller of the centre-right Christian democrats and Toni Brunner , who heads the Swiss People's Party (SVP), the biggest party in parliament's lower house, said they were sceptical.

"As a result of the government's redistribution, those companies which took preventative measures in advance and are now suffering less would probably get nothing," the TagesAnzeiger quoted Brunner as saying.

"We should instead strengthen Switzerland by cutting taxes, fees and regulations," he said.

Copyright Reuters, 2011