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Switzerland's surprise deficit

February 11, 2015

The Swiss government has reported the country's first budget deficit in almost a decade. Bern said the stark drop in income came as a surprise, as it saw surpluses even in the worst years of the global financial crisis.

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Swiss francs
Image: picture-alliance/dpa/Berg

Switzerland reported a federal budget deficit of 124 million francs (118.5 million euros, $133.8 million) for 2014.

The government said Wednesday it marked the first budget without a surplus in nine years and came as a big surprise as spending last year was cut by 2.1 billion francs.

Swiss Finance Minister Eveline Widmer-Schlumpf said "we will investigate the shortfall in revenues," with the government having penciled in a 121-million-franc surplus for 2014.

Good times may be over

Back in 2013, Switzerland still recorded a surplus of 1.3 billion francs and was far away from a deficit even through the years of the global financial crisis, with a negative budget last logged in 2005 and public debt shrinking to below 50 percent of gross domestic product (GDP).

Last year's revenue shortfall did not augur well for the country as its economic growth is expected to slow due to the sharp rise in the value of the franc after the central bank last month abandoned its effort to keep the value down against the euro.

Swiss banking giant UBS said the economy would only expand by 0.5 percent this year, after growing by 1.9 percent in 2014.

The government hinted it would further reduce spending in the years ahead by freezing staff costs and reducing expenditures elsewhere.

hg/sri (Reuters, dpa)