This week, Switzerland’s federal government said it expects to run a deficit of CHF 900 million in 2024, a figure significantly below the original forecasted deficit of CHF 2.6 billion.
The original figure has now dropped twice, once in June by CHF 1 billion and now by a further CHF 0.7 billion to CHF 0.9 billion.
The recent forecast reduction is driven by higher receipts (+0.4 billion), mainly from investment activities, and lower spending (-0.3 billion), driven by some areas of government spending coming in lower than budgeted.
The forecast includes net figures after ordinary spending (+0.2 billion) and after additional extraordinary spending (-0.9 billion).
The net result after ordinary spending now falls well within what is allowed under Switzerland’s debt brake rule. The debt brake determines the allowable ordinary deficit by calculating the health of the economy. When the economy is weak, larger deficits are allowed. When it is operating at full capacity, the books must show a positive result. The health of the economy is determined by calculating how close the economy is to full potential output. The allowable ordinary deficit at the end of September 2024 was -0.6 billion compared to a forecast of +0.2 billion. Forecasted extraordinary spending combined with extraordinary revenue takes this down to -0.9 billion.
All of the extraordinary spending of CHF 1.4 billion relates to financial support for Ukrainian refugees. This number has increased by CHF 0.2 billion from the original budget. This is offset by 0.3 billion of extraordinary revenue from the partial sale of RUAG, anti-competition fines and the repayment of Covid loans.
A large part of the difference between the original budget (-2.6 billion) and the latest one (-0.6 billion) is due to the postponement of payments of around 1 billion to Swiss Rail. Because approval of these payments took longer than expected to pass through parliament they will now be paid in 2025. Swiss Rail is in financial difficulty and the government decided exceptionally to provide additional money to the company on top of the regular annual financial support it receives from the federal government to keep its trains rolling.
More on this:
Government press release (in French) – Take a 5 minute French test now
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