Switzerland suffers from low growth in production and per capita income and has to confront medium- to long-term fiscal management issues. This situation is only partly related to poor cyclical developments in Europe as trend growth has also been slowing. Moreover, in the absence of a significant pick-up in efficiency, trend output growth will diminish further due to population ageing, inducing growing fiscal pressures. In this context, the authorities face two key policy challenges: i) Raising growth performance.