Swiss Strengths during COVID-19: Effective Government Measures, Low Public Debt and Debt Brake System
The Swiss government announced that despite lockdown having a significant impact on its economy, the country is still well-positioned as the fore-planned measures and low public debt have played a significant role in minimizing economic and social damages caused by COVID-19.
EFFECTIVE GOVERNMENT MEASURES
Some of the Swiss government’s measures taken to reduce the economic and social consequences of COVID 19 are:
Since mid-March, more than 65 billion Swiss Franc has been poured in the systems to support companies, employees and self-employed persons in Switzerland.
The country allocated 40 billion Swiss Francs so far towards COVID-19 bridging loans and over 10 billion to support unemployment insurance. Another effective measure has been the short-time work compensation which allows employers to reduce salary costs by paying their employees the short-time work compensation financed by unemployment insurance.
MODERATE PUBLIC DEBT AND DEBT BRAKE SYSTEM
The epidemic has had an unprecedented impact to various areas of the federal budget. However, whilst other countries such as Japan, the United States, France and the UK burden the public debt with more than 100% of the country’s GDP, Switzerland has a public debt of only 27% of its GDP.
This moderate public debt is related in particular to the Extraordinary Expenditure Rule in the Swiss debt brake, a systems introduced to the country in 2003 which ensures that expenditure and receipts in the federal budget are balanced for the long term. The debt brake system also helped Switzerland overcome the crisis in 2008 better than many other countries. Swiss debt brake is designed to be flexible in an extraordinary situation. Meaning that the parliament can flexibly raise the expenditure for extraordinary circumstances such as severe recessions, natural disasters, war, epidemic, etc. This rule ensures that the country can react in such crisis with as little harm for the federal budget as possible.
Swiss political stability and government support makes Switzerland onc of the most attractive jurisdictions for companies. We are specialists in Swiss company incorporation, administration, payroll and accounting. If you need our assistance in the application for government supports or have any questions, please get in touch atadmin@ftrust.ch.