Large government budget deficit in 2021 for Switzerland

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Investec
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On 16 December 2020, Switzerland’s Council of States, the nation’s upper house, accepted a 2021 budget deeply in the red following its acceptance last week by the National Council.

In 2021, Switzerland’s federal government plans to collect CHF 75.8 billion while spending CHF 81.9 billion, plunging the budget CHF 6.1 billion into the red.

The pandemic has significantly increased spending. Spending in 2021 is expected to be 8.8% higher than in 2020 and the minister of finance does not expect the federal books to be balanced until 2024.

Government Covid loans now total CHF 6.6 billion. Restaurants, tourism and event operators have received CHF 1.9 billion of this total.

Back in 2019 when Switzerland’s finances were healthy the nation closed the year with a surplus of CHF 3.1 billion and federal government debt of CHF 96.9 billion, representing 13.9% of GDP. In 2019, the federal government managed to repay CHF 4.0 billion of debt, something it will not be repeating in 2021.

On 9 December 2020, the federal government managed to sell 10 year bonds at a yield of -0.556%. This means the markets are essentially paying to lend Switzerland money for 10 years.

About Investec

Investec is a distinctive Specialist Bank and Asset Manager. We provide a diverse range of financial products and services to a niche client base in three principal markets, the United Kingdom, South Africa and Australia, as well as certain other geographies. Investec’s strategic goals are motivated by the desire to develop an efficient and integrated business on an international scale through the active pursuit of clearly established core competencies in the group’s principal business areas.

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