Swiss government predicts CHF845 million budget deficit in 2026

Spending is increasing by 5%, mainly due to the 13th state pension payment and the army budget, the Swiss government says. Keystone / Peter Klaunzer

The Federal Council published its 2026 budget proposal on Thursday: a projected deficit of CHF845 million francs ($1 billion). Spending is increasing by 5%, mainly due to the 13th state pension payment and the army budget.

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The CHF845 million figure is roughly the same as the one forecast last year for the 2025 budget, and three times lower than the previous year. However, typically the final accounts, with the actual figures, are almost always better than announced.

The 13th state pension payment, which will be paid for the first time next year, is the first factor cited by the Federal Council to justify the increase in spending, followed by the sharp rise in defence spending.

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While these two items will weigh on federal finances in the coming years, the government highlights other expenditures, including CHF600 million for Ukrainian refugees and the participation in European Union research programmes.

A second austerity programme?

The 2026 budget does not take into account US tariffs. But a decline in exporting companies, or relocations, would cause a drop in tax and VAT revenues, which could pose a problem, not just next year, but for the near future, according to the government, which took the opportunity to reiterate the “importance” of its savings plan.

The Federal Council is even preparing the ground for a second budget savings programme, as spending is expected to continue to rise in the coming years, with speculation that the highly controversial austerity programme will be accepted. Next year, the federal government is expected to spend CHF91 billion. In 2029, it is counting on CHF98 billion.

In any case, parliament will have the final word. A debate on 2026 budget is planned in December.

Translated from French by DeepL/sb

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