January is the month of good resolutions. It is also that of savings. Following the end of year holidays, many households reduce their spending. Everyone knows what “saving” means: it means spending less. It’s about managing your resources parsimoniously. People who continually overspend end up trapped in debt.
The same is true of the State. When its expenses exceed its revenues, its debt increases. The United States has thus accumulated debts of more than 36,000 billion dollars. And every day, their debts increase by around 10 billion. In France, the debt rate has risen above 100% of gross domestic product. In other words, the country’s debts are greater than the wealth created during a year. The problem is that passive interests also increase, and the State sees itself restricted in its capacity for action. Not to mention that growing debt weighs on consumer spending and future generations.
Thanks to the debt brake, Switzerland is in a much better situation
When it comes to debt, Switzerland is in a much better situation. Its debt ratio is less than 30%. Thanks to the debt brake. This in fact obliges public authorities to balance finances in the medium term. The debt brake was adopted in 2001 by an overwhelming majority of nearly 85% of voters, because it embodies “common sense”. It is the guarantor of good practices in budgetary management.
Even a state cannot spend more than it earns in the long run. A wise financial policy is an asset for the future. The Confederation must take measures if it wants to preserve its capacity to act – also in times of crisis. It needs financial room to maneuver to meet future challenges. Frank Marty described the mechanisms at work very well in a recent blog. If federal spending increases excessively, it will eventually cause problems. The Federal Council has therefore developed a relief program which should be submitted for consultation at the end of January. This is based on the proposals of the Gaillard group of experts and acts primarily on expenditure, which is wise. In this case, it does not make radical cuts, but sets priorities. Where can spending efficiency be improved? Where can costs be avoided?
The relief program must be maintained as is
The goal is to stabilize federal finances. For economic circles, it is clear that this program must be maintained as is. All areas must contribute. During the recent winter session, Parliament managed to pass a budget which respects the debt brake despite targeted spending increases. For this, two things were necessary: compensation likely to bring together a majority and a united bourgeois camp. Similar determination will be necessary to rebalance the federal budget sustainably. Political circles must implement the mandate enshrined in the Constitution.
What goes without saying for households often arouses indignation in the political arena, where special interests make themselves heard. Within political parties, comments quickly become virulent. We talk about saving “until death” or “social winter”. However, it is absurd to apply such qualifiers to the Federal Council’s relief program. In fact, this program will only slow down spending growth. These will continue to progress, just a little slower. This is why we are talking about reduction and not savings. In this case, the Confederation opts for “savings light».
Reducing federal spending is not an end in itself. The aim is to preserve the state’s capacity to act in the long term, which is in everyone’s interest. Because only a state whose finances are healthy is solid. economiesuisse supports responsible financial policy and will therefore support the relief program with conviction.
