Budget crisis in Austria: summit demands profound reforms!

Budget crisis in Austria: summit demands profound reforms!

On Wednesday, a summit discussion with top representatives of the federal, states and municipalities took place in the Federal Chancellery, which dealt with the urgent renovation of the budget. In this context, Chancellor Christian Stocker expressed that he was "surprised" by the current budget numbers that became known at the beginning of the week. During a ridge, a saving potential of 6.4 billion euros was determined, which indicates the need for a total state effort. The goal is to reduce the deficit to 3 percent of GDP.

At the press conference, Stocker said that further efforts were necessary to master the financial challenges. Vienna Mayor Michael Ludwig (SPÖ) and Wilfried Haslauer (ÖVP), Chairman of the Governor Conference, were ready for reforms. Haslauer spoke of a "huge opportunity" for necessary reforms by serving the high deficit as an incentive.

difficult economic situation and reform needs

The budgetary situation is made more difficult by the deficits for 2024, which are specified at 4.7 percent of GDP. These are significantly higher than in the forecasts of the economic researchers, as well as bmf . The total debt ratio of Austria was 81.8 percent of GDP in the previous year, with 70.8 percent of them being on the federal government. A complete analysis of the situation and a catalog of measures are expected to sustainably improve the budget.

Ludwig also warns that despite a generally increased willingness to implement savings that have increased expenses in areas such as care, health and elementary pedagogy. The need for conversations at eye level and votes for tax law measures was also emphasized.

forecasts and economic uncertainties

The economic situation in Austria is currently tense. According to ORF , economic output in 2023 fell by 0.9 percent, which leads to a recession in the second year in a row. However, the forecasts for 2024 indicate a slight increase in real economic output by 0.6 to 0.7 percent, without taking into account a possible savings program that could continue to burden the economy.

The unemployment rate is estimated for 7.0 percent for 2024, with an increase to 7.4 percent in 2025. These developments are negatively influenced by factors such as rising energy prices and persistent inflationary tendencies, which were 7.8 percent in 2023. The need for a balanced budget consolidation becomes increasingly urgent to enable sustainable recovery in the economy.

The government is committed to the consolidation course and plans concrete savings in the double budget 2025/2026. A clear budget path is intended to stabilize the state finances, with bmf demands the seriousness of the situation and demands growth by stirring the economic engine. The collective responsibility of the federal government, the states and municipalities is highlighted as a fundamental factor for reducing the overall state.