Austria's budget -hole: deficit forecast of 4.5 % brings the alarm!

Austria's budget -hole: deficit forecast of 4.5 % brings the alarm!

Österreich - Austria is faced with a forecast budget deficit of 4.5 percent of gross domestic product (GDP) in 2025, which is 4.4 percent above the expectations of the fiscal council. The Ministry of Finance emphasizes that the deficit could increase over 5 percent without corresponding consolidation measures. The main factors for this are a persistently weak economy, lower income in the case of economic benefits such as corporation tax, increased unemployment and higher interest costs. The expenditure increases by the previous government also contribute to the tense situation, reports the small newspaper.

The fiscal forecast is based on the budget controlling of the Ministry of Finance, the tax estimate of the department and building prevention of states, municipalities and social security. The government's consolidation efforts should also include savings in the 2025/26 double budget in order to find a balance between savings and the burden on the economy and employment. Finance Minister Markus Marterbauer from the SPÖ said that the mix of savings, tax increases, reforms and efficiency increases is crucial to ensure economic stability.

consolidation requirement and EU requirements

The current financial situation has already raised questions regarding a possible EU deficit procedure, with a decision that is expected in July in the Council for Economics and Finance (Ecofin). Christoph Badelt, President of the Fiscal Council, warns that Austria could possibly face such a procedure for excessive deficit. This would be a critical development after the debt rate is expected to increase from 78.6 percent of GDP in 2023 to 85.0 percent by 2028

• forecast deficit 2024: 3.9 % of GDP
• forecast deficit 2025: 4.1 % of GDP
• necessary consolidation needs by the end of 2025: 7.4 billion euros
• estimate of the consolidation package for 2025: at least 6.3 billion euros

government negotiations and challenges

The government coalition of ÖVP, SPÖ and NEOS faces challenging negotiations. Chancellor Christian Stocker emphasizes the importance of the financial situation and the need for the financial load capacity of all projects. While the economy is expected to shrink the third year in a row, the coalition plans to save a total of 8.7 billion euros in the next two years. The discussion about the budget report and the savings measures already takes place in the parliamentary budget committee.

Finance Minister Markus Marterbauer emphasizes that the savings goals should be reached until the budget speech on May 13, even if they could probably be above the Maastricht criteria. An upcoming deficit procedure would result in both intensive exchange with Brussels and extended reporting obligations for Austria, so that the coalition would be under high pressure to master the challenges of state finances in order to meet EU requirements below 3 percent. In the past, Austria already went through such a procedure between 2009 and 2014.

While the coalition remains optimistic of complying with the fiscal rules, critics express concerns about the growth forecasts and the preliminary budgets of the federal states that could be worse than originally expected.

Overall, it can be seen that the Austrian government faces a complex financial challenge that requires both short -term and long -term solutions to restore stability and trust in the state finances.

More information can be found in the articles of Kleine Zeitung , and Profile .