21 Jul 2021
Posted in Aerospace, Defense & Security
Swiss population’s desire to uphold self-defense capabilities is driving Switzerland’s defense expenditure
Switzerland’s defense budget is forecasted to continue to grow despite economic pressures from the COVID-19 pandemic, driven by the public to continue to fund self-defense acquisition programs. The Swiss defense expenditure is forecasted to grow from US$7.9bn in 2021 to US$8.6bn in 2026, registering a modest compound annual growth rate (CAGR) of 0.86%, says GlobalData, a leading data and analytics company.
The company’s latest report, ‘Switzerland Defense Market Attractiveness, Competitive Landscape and Forecasts to 2026’, reveals that while the budget remains relatively small in comparison with some of Switzerland’s neighbors the sustained growth over the forecast period speaks to Switzerland’s commitment to upholding its self-defense capabilities.
Madeline Wild, Associate Defense Analyst at GlobalData, comments: ‘‘Switzerland’s direct democratic procedure means that all major defense spending decisions are subject to public referendum; when this is considered in conjunction with the predicted growth in defense expenditure, the Swiss commitment to maintaining a strong self-defense force is evident.”
In September 2020, the public voted to continue with the process to procure 34 new fighter jets as part of the AIR2030 program, despite the financial impact of the COVID-19 pandemic. The program will cost US$6.61bn between 2021 and 2031, a number which is particularly sizeable when compared to the size of the annual defense budget. While the motion passed by only 50.1%, enough votes were received for the bidding process that is currently underway to continue. In the face of economic hardship caused by the pandemic, Switzerland’s public affirmed their commitment to maintaining their self-defense force by passing this referendum.
Wild continues: “This is even more interesting when compared to the result of the 2014 referendum when the Swiss public blocked the procurement of the Saab Jas-39 aircraft. The outcome of the 2020 vote may be indicative of a national sense of uncertainty and vulnerability imparted by the COVID-19 pandemic, signaling that the Swiss public are currently committed to funding their Armed Forces in a way that they were not seven years ago.
“Despite the neutral position upheld by Switzerland, defense spending remains relatively high per capita at US$910 in 2021. For a country whose Armed Forces only currently actively participate in peacekeeping and humanitarian missions, this size of the defense budget may seem unusual. However, to continue to partake in international operations the Swiss Armed Forces must maintain a modern, capable fighting force.”