Long the envy of the world, Switzerland is clean and efficient, with a near perfect democracy, beautiful mountains and lakes, great chocolate, skiing and above all stinking rich. Now suddenly that Swiss Utopia appears to be failing.

Last week’s plane disaster near the Swiss border and subsequent revelations of shortcomings in the Swiss air traffic control system comes on the back of many recent negative news reports from Switzerland.

Swiss banks, insurance companies and other long-established blue chips are all reporting financial problems and showing spectacular falls on the Swiss stock exchange. Zurich Financial Services’ shares have tumbled from a high just 18 months ago of over £440 to around £110 today. Swiss Life and Credit Suisse post similar falls and, as the beleaguered shareholders of Switzerland’s flag carrier, Swissair, which collapsed in spectacular fashion last October, know only too well - their shares fell from a high of over £260 to nothing.

Are cracks starting to show in the Matterhorn? Is Swiss cheese turning into only holes? Is the well-ordered wonder economy faltering? Is the Swiss franc that has soared an amazing 900% against the pound over the last 50 years about to take a dive? Is this the beginning of the end for Switzerland?

I think not.

Switzerland is in so many ways a conundrum. Neutral for centuries, but with an army bigger than the UK’s and a thriving arms industry. The country that invented muesli also has the highest level of smokers in Western Europe - you are more likely to find a restaurant that bans meat, than one that bans smoking. Switzerland’s egalitarian system of self-government, which gets its citizens voting at least four times a year on every subject imaginable, is held up to the world as a near-perfect example of how democracy should work. But the Swiss cabinet has been made up of the same four political parties since 1959 regardless of what the voters say.

Things move slowly and carefully in Switzerland. Decisions are made neither rashly nor quickly – it is simply not in the Swiss character to do anything else. There is a saying that the Swiss get up early, but are slow to wake up. Their ‘doziness’ has not done them badly. Larger towns have trams – they never went out of fashion. Swiss railways were never abandoned for road traffic and today the trains are clean, cheap and still run on time. The Swiss equivalent of the 11 plus is still dividing its children into grammar school or secondary modern pupils. Many Swiss children still go to school on Saturday mornings, so such innovations as comprehensive schools are not even up for discussion. The resulting state education is so good that parents only resort to private education when there is something wrong with their child, not the local state school.

Conservatism, discretion and caution are the cornerstones of the Swiss banking and insurance industries. Now it seems the very characteristics that built these empires are threatening their demise. Contradictions, though, are nothing new to Switzerland. The tax system is positively archaic and remains where the British one was in the 1930s – income tax is low, death duties and capital gains taxes don’t exist in many cantons and VAT, which was only introduced in 1995 is a derisory 7.5%. But the Swiss complete their tax form on a computer

The amazing revelation that the Swiss air traffic control system that was partly shut down while in operation sheds more light on the Swiss puzzle. This time it is their obsession with the correct functioning of everything, even to the extent of compromising safety. Rather as a car driver might have his seat belts removed to have them tested, while continuing to drive his vehicle, so it appears the air traffic control centre switched off its mid-air collision detection system for routine maintenance. It is the same mentality that replaces water mains in the road before they leak, repaints buildings before the paint cracks, tests flood warning sirens once a year and, in its most outlandish form, legislated that all homes must have a nuclear shelter.

While the rest of the world has been cutting corners and exploring the benefits of creative accountancy, Switzerland has doggedly held on to its mid-twentieth century values and you cannot argue that it wasn’t a bad policy – until now. Policies like paying its unemployed 70% of their last salary, whatever it was. (But only for 18 months.) Apprenticeships, jobs for life, the highest wages in the world and generous state pensions – policies that all suddenly seem unaffordable.

In Switzerland tradition and technology walk, and occasionally stumble, hand in hand – it is as modern and forward thinking as any land, when it comes to such subjects as the environment and recycling. Change is no challenge, but the speed of change can be.

In the 1970s the Swiss watch industry was nearly wiped out by the advent of the digital watch. The industry survived by specialising in what it did best – making high-priced precision pieces and covering the lower end of the market by reinventing the whole idea of what a watch is with the innovative and world-beating Swatch. Today Switzerland faces a not-dissimilar problem. Traditional institutions find themselves uncompetitive in the new Global market.

The twenty-first century and the Swiss slow-but-steady approach appear uncomfortable partners just now. However, Switzerland is small and flexible enough to meet any challenge. In 2001 a Financial Times survey rated Switzerland highest among countries best placed to develop their high-tech industries. And as for resources: any economy that is backed by so much gold that its people have to vote on where to spend the excess, as they will in September, can’t fail – surely? Switzerland is just changing, but not failing.