Switzerland’s federal government needs to cut CHF 2.4 billion in 2027 and CHF 3 billion in both 2028 and 2029.

The Federal Council submitted its austerity package to parliament on Friday. The Council of States is set to review it during the winter session, followed by the National Council in the spring.

Switzerland’s public finances are under strain, with spending having outpaced revenue growth for years. Revenues are projected to reach CHF 98 billion by 2029, yet structural deficits of over CHF 2 billion are expected to return in 2027 and widen to more than CHF 4 billion by 2029, despite earlier belt-tightening in the 2024 and 2025 budgets.

In response, the government has revised its 2027 spending plans. After consultations, it reduced its initial cutback proposal from CHF 2.7 billion to CHF 2.4 billion, distributed across nearly 60 measures. The savings target is set to increase to CHF 3 billion in 2028 and CHF 3.1 billion in 2029.

The austerity package aims to cut CHF 300 million from federal operating expenses by 2028, with around CHF 190 million coming from staff-related costs.

At least CHF 100 million of those savings are expected from adjustments to employment terms.

In addition, over half of the proposed measures will require amendments to existing laws and will be consolidated into a single reform bill, while the rest will be presented to parliament through the regular budget process.

The government cautions that if parliament rejects or dilutes the proposals, deeper and earlier cuts will be necessary, primarily affecting education, research, development aid, agriculture, and defence.

To replace the current savings plan, reductions of up to 10% would be required across these sectors, with non-defence areas bearing an even greater burden if the military is spared.

Officials argue that without such fiscal tightening, Switzerland would need to increase borrowing to cover its growing expenditures.

By the end of 2024, Switzerland’s federal government debt stood at CHF 141 billion, equivalent to about 17% of GDP. In comparison, in 1990 the debt was CHF 40 billion, representing roughly 10% of the country’s GDP.

In addition, beyond federal obligations, Switzerland’s cantons and municipalities also carry debt. Including these local liabilities, the country’s total public debt reached roughly 37% of GDP by the end of 2024.