In 2023, Switzerland's federal budget nearly balanced, yielding a structural surplus of +0.3% of GDP and a low debt ratio of 37.9% of GDP. Although cost-cutting measures came into effect in 2024, rising expenditure on defense, pensions, healthcare, climate policy and Ukraine-related support led to increased spending. Nevertheless, the fiscal balance remained positive at +0.5% of GDP, with the debt ratio rising slightly to 39.0% of GDP. In 2025, fiscal policy became slightly more accommodative, with increased spending on social benefits. Meanwhile, the SNB cut rates by -175bps since March 2024 to 0% in June, signaling support for the economy. The general government surplus stood at +0.4% of GDP, narrowing to +0.2% in 2026 due to higher pension payment costs resulting from the 13th monthly pension payment, which was approved in March 2024 and came into effect. The fiscal projections assume that the proposed increase in the VAT rate by +0.7pp in 2027 will be approved to finance higher social spending. This would increase the government balance to +0.4% in 2027. Federal fiscal policy will remain in line with the constitutional debt brake, which requires a structurally balanced budget. Consequently, government debt as a percentage of GDP is expected to decrease only marginally from 38.3% in 2025 to 36.9% in 2027. 

Although the trade deal with the US mitigates the anticipated negative effects of tariffs on the Swiss economy, tariffs continue to be a significant source of uncertainty. It is still unclear whether and to what extent the pharmaceutical sector, which accounts for almost half of Swiss exports to the US, will be subject to tariffs. Other economic risks persist. A deterioration in the international environment cannot be ruled out. Financial markets remain vulnerable to significant corrections. Risks related to global debt, especially sovereign debt, have intensified. Balance sheet risks in financial institutions and vulnerabilities in real estate markets also persist. Geopolitical risks remain high, particularly in relation to the ongoing conflicts in Ukraine and the Middle East. If any of these risks materialise, it is expected that there will be further upward pressure on the Swiss franc. 

The Swiss business environment proves very strong: the country scores very well in regulatory quality, rule of law and control of corruption. Switzerland boasts a well-educated labor force. Switzerland could streamline requirement necessary to set up new firms and the licensing system. Regulatory barriers in the energy, transport and e-communications sectors are higher than in the average OECD economy while barriers to trade are low. 

The Swiss political system is a unique blend of federalism, direct democracy and consensus. Citizens can vote directly on laws via referendums or initiatives, and power is divided between the federal, cantonal and communal levels. In the 2023 national elections, the far-right, Eurosceptic Swiss People's Party (SVP) emerged as the clear winner. Instead of a traditional majority government, Switzerland is governed by a seven-member Federal Council which makes decisions by consensus and reflects the major parties of a grand coalition: the right-wing Swiss People's Party (SVP), the center-left Social Democratic Party (SP) and the liberal FDP. This makes Switzerland a semi-direct, consociational democracy with strong cantonal autonomy. The next elections will take place in autumn 2027.