Austria's savings package: 6.4 billion euros savings are imminent!

Austria's savings package: 6.4 billion euros savings are imminent!

Österreich - Austria is facing a challenging financial future, since the new federal government, consisting of ÖVP, SPÖ and Neos, plans to implement a savings package of 6.4 billion euros in 2025. This project is part of a larger financial strategy that aims to stabilize the economic situation and reduce the budget deficit of 4.5 percent. The reasons for the precarious budgetary situation are diverse and include the persistently poor economic situation, rising interest rates and the increase in expenditure of the previous government. Finance Minister Markus Marterbauer announced that he will present the details of the measures on May 13, 2025 in his budget speech. For 2026, another savings volume of 8.7 billion euros is planned, which reflects the long -term plans of the government to promote financial consolidation. ([5min] reports that ...).

A central point of the planned austerity measures is the abolition of the climate monus, the reintroduction or increase of certain taxes and levies as well as the suspension of the educational leave with a new regulation that is to be introduced in the coming year. In addition, unemployed people who do not accept minor employment should be subject to restrictions. Another measure affects the health insurance contributions, which are increased from 5.1 to 6 percent for retirees, which could possibly lead to net pension cuts.

austerity measures and their effects

The Federal Government has already set some specific savings that are to be realized as part of the savings package. Among other things, this includes:

• Abolition of the climate monus (1.85 billion euros)
• Abolition of educational leave (EUR 350 million)
• savings in the administration (1.1 billion euros)
• End of the tax exemption for photovoltaic systems (EUR 175 million)
• raising the bank levy (EUR 350 million)

The total consolidation measures already fixed amounts to around 4.3 billion euros. Nevertheless, there is an amount of around 2 billion euros, the exact use of which must be set until the budget speech on May 13, 2025. The fiscal council expressed concerns that the desired savings of 6.4 billion euros can actually be achieved this year and is more likely to save a saving of a little more than 4 billion euros. ([Today] reports that ...)

Austria has been in an economic recession for three years. According to forecasts, a deficit of 3.5 percent of the federal government is expected for 2025, while the federal states and municipalities should be around 1 percent. The debt rate remains at a high level of 84.7 percent. The difficulties of the current economic situation not only require austerity measures, but also a mix of tax increases, reforms and increases in efficiency. ([ORF] reports that ...)

political reactions and outlook

The political reactions to the planned measures are mixed. While the NEOs are calling for more comprehensive reforms, the FPÖ criticizes the consolidation measures as inadequate. The Greens warn of the possible negative effects of austerity measures and advocate investing in future -oriented projects instead of making cuts.

The decision on a possible EU deficit procedure is expected in the Ecofin Council in July 2025, since the budget deficits of 4.7 percent significantly exceed the permissible limit of 3 percent in 2022 and 4.5 percent in 2023. In the coming months it will be shown whether the government's assessment is realistic and whether the measures can actually achieve the desired stabilization of the financial situation.