Government debt in Switzerland has been further reduced. With the ratio of government debt to GDP in Switzerland now at 29.7%, some speak of the “Swiss miracle”. As other countries around the world continually amass more debt, Switzerland’s government has been given a mandate to save by the People – the voting citizens of the country.
According to the most recent data, Switzerland steadily continues to reduce its debt. The economic and fiscal statistics of this small Alpine jewel of a country are impressive, especially compared to its neighbors. The average EU debt-to-GDP ratio stands at 85%. However, it wasn’t too long ago, that European newspapers were declaring the downfall of Switzerland.
After the Swiss people decided to not join the EU in 1992, all kinds of horror scenarios were circulated. The Swiss would be isolated. Dependent on their European neighbors, but not included in the EU, “Switzerland is heading towards bankruptcy,” declared the weekly magazine “Facts” in 1997. Well, given the way things actually turned out, maybe that publication should change its name from “Facts” to “Fiction”. Switzerland has fared better than any and all EU-members, by pretty much every economic measure there is.
In fact, in Europe, it is Switzerland and Norway, another non-member, that have fared best fiscally and economically. Of course, in Norway, income is boosted by a robust oil industry. Still, it might be good for the Brits to take note of the fact that you needn’t be a member of the CRBB – the “Centralistic Regime of Brussels Bureaucrats” to thrive.
A decisive factor in guaranteeing the good health of the public coffers has been the Swiss “debt brake”, a mechanism introduced in 2003 to prevent debt growth. However, the core driver of Swiss fiscal health really lies in its direct democratic regime. The people of Switzerland passed this law and the government simply enforced the will of the people, as is the case in most important decisions in the country. Frank Suess talked about this only two weeks ago in an interview with Global Gold.
One would think that everyone in their right mind would welcome fiscal stability and a government that saves more than it spends, rather than the opposite. However, spending seems to be the name of the game these days. As portrayed in an article by The Local.ch, there were plenty of politicians that were angered by Switzerland’s budget surplus. Luckily, it’s not the politicians, nor the bureaucrats in Brussels that have the last word on how things are done in Switzerland. It’s the Swiss people. And they still seem to have a lot of common sense and quite a bit of discipline.