Austria threatens EU deficit procedures: Budget pressure increases dramatically!

Austria threatens EU deficit procedures: Budget pressure increases dramatically!

The former finance minister Magnus Brunner (ÖVP) today commented on Austria's budget for 2024. In his statement, he referred to the numbers of the WiFo and IHS, which were used as the basis for the budget. According to the data from statistics Austria, the budget deficit in 2024 is expected to be 4.7 %, which is above the Maastricht value of 3 %. Brunner found that the responsibility for an impending EU deficit procedure was ultimately with the Federal Government and its negotiations with the EU Commission.

originally predicted WiFO and IHS an economic growth of 1.2 % for 2024. However, these forecasts have been revised and are now at -0.6 % and later even -1 %, which increased the deficit by additional 1 %. Brunner emphasized that the finance ministers rely on the expertise of economic researchers. The current finance minister also confirmed that economic development has a significant impact on the budgetary situation.

challenges for the federal government

The challenges for the federal government are considerable. Finance Minister Markus Marterbauer (SPÖ) spoke of a serious starting point and described a deficit procedure as likely. An additional burden results from the fact that the budget forecasts for the years 2023 and 2024 were revised down again due to an deteriorating economic situation. The Austrian National Bank (OENB) and the budget committee have adapted the growth forecasts, and the fiscal council chief Christoph Badelt warned of a non -durable deficit should continue to decrease.

forecasts and EU challenges

Austria could soon follow other countries in the EU deficit procedure. Barbara Eibinger-Miedl, State Secretary in the Ministry of Finance, was optimistic that a deficit procedure is not inevitable if the economy should not be endangered. The new EU fiscal policy also enables more slower debt reduction, but Austria would have to raise around 2.5 billion euros annually to reduce the debt.

The next steps are clear: The Ministry of Finance must present detailed savings by May 13th, and the financial plans for 2025 and 2026 are to be decided on June 18. In this tense situation, the uncertainty of the currently prevalent economic framework contains additional challenges for the federal government's sovereignty. It remains interesting how the federal government will react to the requirements of the EU because it cannot prescribe any specific measures.

But the government negotiations of the ÖVP-SPÖ-Neos-Neos coalition remain challenging. Chancellor Christian Stocker shared the worries of the party leaders and referred to the dependence of the project implementation on the financability, while the economy is likely to continue to shrink, which the situation is also complicated.