Swiss federal budget deficit to be lower than expected

Swiss Finance Minister Karin Keller-Sutter. Keystone-SDA

The Swiss federal government is expecting a much smaller deficit than forecast. Instead of CHF800 million ($995 million) predicted for 2025, the federal budget deficit is expected to be CHF200 million, mainly due to a rise in tax revenues.

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As tax receipts “exceeded expectations” last year, they have been revised upwards by CHF1.5 billion for 2025, the Federal Council said on Wednesday.

Income tax will benefit “strongly” from the additional revenues for 2022 and 2023 from energy and commodities trading companies in Geneva. Some CHF900 million is expected for 2025, according to the government, which points out that this is a “one-off and temporary” phenomenon. At the same time, VAT revenues are expected to fall by CHF200 million.

Horizon Europe envelope

Ordinary expenditure is expected to increase by CHF200 million, mainly due to additional appropriations requested during the year. This applies in particular to the CHF666 million envelope approved for participation in the European Union Framework Programme for Research and Innovation, of which Horizon Europe is a part.

This is the first time since the introduction of the debt brake in 2003 that ordinary expenditure could exceed the amount budgeted, according to the government.

In the end, the ordinary budget should show a surplus of CHF700 million, instead of the CHF500 million deficit forecast, according to the Federal Council. This represents a difference of CHF1.2 billion.

Savings plan maintained

Despite these positive figures, this does not affect the government’s planned budget savings programme. “This does not alter the fact that, without the implementation of Budget Relief Programme 27, deficits of several billion Swiss francs are expected for the years of the financial plan,” says the finance ministry.

+ Switzerland outlines budget plan to save billions of francs

The extraordinary budget has deteriorated. This is due to a one-off payment of CHF850 million to stabilise Swiss Federal Railways finances. Extraordinary income is also expected to be higher than budgeted (CHF200 million), thanks to the additional amount distributed from the Swiss National Bank (SNB’s) profits.

No Trump effect for 2025

According to the Federal Council, the 39% tariff imposed by the United States on imports of Swiss products should not have a “significant” impact on federal finances this year.

It is currently difficult to predict how Swiss companies will react to this situation. However, it is their behaviour that will determine the impact of customs duties next year, particularly on spending linked to short-time work and on VAT revenues. There should also be a delayed impact on the level of federal revenues in the medium term.

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Adapted from French by DeepL/sb

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