The current report on the long-term sustainability of public finances in Switzerland sets out how the progressive ageing of the population will affect Switzerland’s public finances up to 2050. Aside from demographic change, the report presents, for the first time, a qualitative analysis of the potential impact of climate change on public finances. It also shows the long-term implications of the considerable government expenditure to deal with the COVID-19 crisis.
The report on the long-term sustainability of public finances in Switzerland shows that the ageing of the population will put a strain on public finances over the next three decades. These effects will be particularly noticeable through to 2035 as baby boomers retire. Government expenditure is likely to increase, resulting in higher public debt. The demographic effects mainly concern retirement provision and healthcare.
In addition to ageing, climate change is also likely to put pressure on public finances in the long term. This is set to result in lower receipts, e.g. from mineral oil tax, and additional expenditure to remedy climate damage, for instance. However, the consequences of climate change are a lot harder to gauge than the effects of ageing.
Measured against the outlined period of 30 years, the considerable expenditure to deal with the COVID-19 crisis will have only a relatively minor influence on the development of public finances, provided that debt is reduced and the debt brake continues to be applied.
Relative to the last long-term outlook from 2016, the current projections show a slightly improved trend for public finances. Nevertheless, there is still a need for economic policy action.