Government is fighting against massive budget crisis: savings package to the test!

Government is fighting against massive budget crisis: savings package to the test!

Österreich - The current economic challenges in the EU throw a shadow on the financial planning of the states. According to a report by Kleine Zeitung Approx. Gross domestic product (GDP) for 2025. In the previous year, the deficit was even higher, at 4.1 percent according to estimates of the WIFO and 4.0 percent of the ihs.

The reasons for this development are diverse. On the one hand, the persistent economic weakness ensures that the tax revenue continues to dampen the public sector. This makes the announced budget renovation difficult, which the new ÖVP/SPÖ/NEOS government is striving for. This has decided on a savings package of over 6.3 billion euros for 2025 and 8.7 billion euros for 2026

budget renovation and austerity measures

In order to reduce the budget deficit, the savings package provides, among other things, the abolition of the climate bonus, educational leave and cuts in funding and ministeries. The original goal of the government was to avert an EU deficit procedure, but the ongoing economic weakness makes this increasingly difficult.

Currently, the planned double budget for 2025/26 has not yet been negotiated, which makes the assessment of public budgets unsafe. The IHS also indicates a high level of uncertainty in budget development. The WIFO emphasizes that the consolidation success is charged by growing pension and health expenditure as well as higher interest expenses.

long-term effects of the Covid 19 pandemy

In addition, the economic context is strongly shaped by the consequences of coronavirus pandemic. According to Destatis , the Covid-19 measures had serious economic and social effects in the EU countries. The pandemic led to a decline in the consumption expenditure of private households due to closed transactions, travel limits and uncertain employment prospects.

The current developments illustrate how closely economic stability is linked to society as a whole. It remains to be seen how the governments will react to these multi -layered problems and whether the savings goals are realistic.