Swiss public finances in good health

Compared to most European countries, Switzerland's public debt is extremely low. Keystone-SDA

Switzerland continues to stand out for the soundness of its public finances. Despite a challenging European and global context, the country’s coffers are in good shape – particularly when compared with those of its neighbours.

The Federal Finance Administration recently published the latest figuresExternal link (for 2024, although not yet fully consolidated). They show that, by international standards, Swiss public finances as a whole – government, cantons, municipalities and social insurance – recorded a surplus of more than CHF4.5 billion ($5.6 billion), against expenditure of almost CHF268 billion (just under CHF30,000 per inhabitant). After surpluses of almost CHF10 billion in 2022 and CHF2.8 billion in 2023, this marks the third consecutive positive result since the pandemic.

Last year’s surplus (still provisional) was mainly due to the revenues and costs of social insurances (surplus of more than CHF5.3 billion) and the cantons (CHF361 million). By contrast, the municipalities (CHF36 million deficit) and the government (CHF1.12 billion deficit) recorded higher expenditure than revenue.

These are important numbers, but to fully understand their significance, it is useful to look at the indicators gathered in the recently updated International Financial Statistics of the Confederation.External link

A European comparison

One key indicator relates the public financing balance (the difference between revenue and expenditure) to gross domestic product (GDP). In 2024, Switzerland had a positive balance of 0.5%.

It was one of the few European countries to do so, alongside Norway, Denmark, Portugal and Ireland. By contrast, most other states ran significant deficits (Austria -4.6%, France -5.9%, Germany -2.9%, Italy -3.5%).

This is despite the relatively low Swiss tax burden, which is expected to fall further after the recent decision to abolish the rental value system. With a tax-to-GDP ratio of 27.2%, Switzerland is comparable to the United States and well below neighbouring countries (2023: Austria 42.9%, France 45.4%, Germany 40.7%, Italy 42.3%).

Low debt ratio

Switzerland’s debt situation is also exceptional by international standards. In 2024, its net debt stood at 15.5% of GDP – far lower than elsewhere in Europe (Germany 46.4%, Austria 57.4%, France 103.4%, Italy more than 128.9%).

Modest public expenditure

Last year, total general government expenditure in Switzerland was CHF267.5 billion, equivalent to 31.3% of GDP. This is considerably lower than in neighbouring countries (Austria 55.8%, France 56.1%, Germany 49.6%, Italy 50.9%).

Switzerland also stands out for how it allocates resources. The largest share (39%) of government spending goes to social security – above the 2023 average of 33% for the 38 Organisation for Economic Co-operation and Development (OECD) countries. Switzerland also invests more in education (15.2% compared with the OECD average of 12.6%) and economic activities (12.1% versus 10.1%). By contrast, it spends much less on health (7% compared with 16%) and defence (2.7% compared with 4.1%).

Translated from Italian using DeepL/amva/ts