Switzerland faces record budget deficit in second year of pandemic

Switzerland’s budget will face a record shortfall of CHF17.4 billion ($18.9 billion) this year, according to early estimates. This follows a CHF14.2 billion deficit in 2020.

Parliament has approved CHF21 billion in extraordinary expenditure to tackle the effects of the Covid-19 pandemic in 2021, but the latest calculations expect only CHF16.4 billion will be needed.

This will be spent mainly on funding workers who have been put on shortened working hours, supporting hard-hit business, acquiring vaccines and conducting coronavirus tests.

Despite a surprise boost in corporate profit tax receipts so far this year, the overall tax yield is expected to fall short by CHF2.4 billion to meet normal state spending requirements.

The bleak figures have been slightly relieved by a CHF1.4 billion windfall from surplus central bank profits.

The estimates presented on Wednesday could be subject to change depending on the course of the pandemic for the remainder of the year, warned a government press release.

Last year’s confirmed budget figures, which were presented in April, showed a similarly dire situation. Switzerland’s finances for 2020 were CHF25.4 billion down on the financial situation in the previous year.