The Swiss government said it suffered its first federal budget deficit in nearly a decade last year following a surprise 9% drop in key sources of tax revenue.

The deficit of 124 million Swiss francs (€118.5m) was the first since 2005, and was also a surprise as Bern had forecast for 2014 a budget surplus of 121 million francs.

Swiss Finance Minister Eveline Widmer-Schlumpf said "we will investigate" the 2.4 billion franc shortfall in revenues in three key areas: tobacco taxes, direct federal taxes and a so-called anticipated tax.

Total tax revenue declined by 3.6% to 63.876 billion francs.

The deficit would have been higher had Bern not cut spending by 2.1 billion francs.

In 2013, Switzerland recorded a federal budget surplus of 1.3 billion Swiss francs.

The Swiss People's Party reacted immediately by saying there is "chaos in the finance department," while the Liberal Party demanded cuts in spending.

The revenue shortfall does not augur well for Switzerland as its economic growth is expected to slow due to the sharp rise in the value of the franc after the central bank abandoned last month its efforts to keep the value of the currency down.

Swiss banking giant UBS believes the country's economic growth will slow from an estimated 1.9 percent in 2014 to 0.5 percent this year.