Austria before the savings emergency: deficit procedure threatens!

Austria before the savings emergency: deficit procedure threatens!

Österreich, Land - The financial situation of Austria proves to be increasingly serious. Finance Minister Gunter Mayr opened his current statement with the determination that the country is now affected by a recession in the third year in a row. This phase of the economic departure is exceptionally long, and many experts, including the WIFO and IHS business institutions, suspect that the deficits at the level of the communities and countries are underestimated. Statistics Austria data that will be published next Monday could possibly bring light into the dark here. The need for EU deficit proceedings is now considered inevitable, but according to Mayr, this is not a drama, but a situation that will result in a steady exchange with the EU Commission.

The decision on the possible deficit procedure is expected for June or at the beginning of July. One central goal is to push the budget deficit under the Maastricht limit of three percent. It is unclear whether this can be done in 2026 and depends largely on the double budget, which will be presented in May. In addition, Mayr, together with the Finance State Councilor, Anna Eibinger-Miedl, called on a total-state effort for budget renovation. However, it remains unclear which concrete savings options are considered for countries and communities.

expectations and assessments on the budgetary situation

A clear goal is the saving of 6.4 billion euros for the current year, which in the media optimistically assesses Marterbauer despite numerous uncertainties. To date, an agreement with the ministries with regard to the distribution of 1.1 billion euros in material costs has been achieved, but this is treated confidentially. Eibinger-Miedl underlined the urgency of this overall-state effort, while the exchange with the EU Commission must be continued intensively.

A key event was a meeting between Mayr and the EU Commissioner Valdis Dombrovski, which was about a coordination of a package of measures to avert an EU deficit procedure. The European Commission has now confirmed that Austria was able to avert the deficit procedure and praised the measures submitted to reduce the deficit in 2025 to less than three percent. This confirmation enables Austria to continue to accept money on international financial markets at cheaper conditions and save the country considerable costs.

challenges and next steps

The European Commission will examine the implementation of the proposed measures as soon as the upcoming government decides a new budget. Averting the deficit procedure is considered a great success, especially since several Member States such as Belgium and France suffer from a deficit procedure in advance. Austria now has to save between 18.1 billion euros (seven years) and 24.1 billion euros (four years) in order to permanently meet the requirements of the EU.

The stability and growth pact, which Austria belongs to, provides for preventive and corrective mechanisms to comply with the deficit and debt boundaries. The Commission's forecasts expect a total-state Maastricht deficit of 3.6 percent of GDP for 2024 and 3.7 percent for 2025, which makes it clear that significant fiscal challenges are imminent without an effective package of measures.

In order to stabilize the financial situation in the long run, sustainable reforms in terms of pensions, health, federalism and financial equalization are also urgently needed. The experts are discussing the currently increasing government spending, especially in support and the automatic valorization of social expenditure. The fiscal council therefore recommends a consolidation plan that includes both output and income -side measures.

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