Warning experts: Austria's budget plan threatens critical deficit limit!

Warning experts: Austria's budget plan threatens critical deficit limit!

On Tuesday, June 2, 2025, the budget committee meets the traditional budget hearing. Involidly invited experts express considerable criticism of the government's budget. The experts agree that the proposed measures are not sufficient to cope with the financial challenges of the coming years. Finance Minister Markus Marterbauer (SPÖ) forecast a budget deficit that is supposed to drop from 4.7 % to 4.5 % of GDP. A deficit of 4.2 % is expected for the next year, with both values significantly exceeding the 3 % limit from the EU.

criticism of the experts

Christoph Badelt, head of the fiscal council, demands more measures as part of the hearing and emphasizes that "even more sharp and unpleasant political resolutions" are required to return to the 3 % deficit limit by 2028. Reforms in the areas of pensions and health are also urgently necessary. Margit Schratzenstaller from WIFO, who was invited by the Greens, sees the cuts in climate measures as a "drop of bitterness", the budget evaluates positively overall. It emphasizes the need to increase the income.

Monika Köppl-Turyna expresses concerns about the lack of existence of structural reforms and the increasing tax rate. It considers the consolidation path to be unrealistic and demands additional savings of five billion euros by 2028. Martin Gundinger from the Austrian Economics Center, which was proposed by the FPÖ, also criticizes the high government spending and increasing debt.

Georg Feigl from the Chamber of Labor, nominated by the SPÖ, criticizes the insufficient stress for wealthy citizens and the excessive cuts that affect less income.

Budget development and EU requirements

The discussion about the budget development is in the context of an increasing net need for the federal government, which is expected to reach 15.4 billion euros in the first nine months of 2024. The payments are already 13.1 % above the previous year, which is due to an increasing pension burden and higher expenses in other areas. At the same time, there is weak development in income, especially in the areas of sales tax and real estate taxes. Against this background, various institutions expect the Maastricht deficit for 2024 between 3.3 % and 3.9 % of GDP.

The reform of the stability and growth pact, which was decided on April 29, 2024 by the EU Ministerial Council, will have further effects on the housekeeping of the Member States. This reform is intended to simplify the rules for government debt and budget deficits, whereby the individual location of the countries is to be taken into account more. In the future, highly indebted countries will have to reduce their debt rate by 1 % annually, while states with debt stands between 60 and 90 % have to reduce them by 0.5 %. However, critics warn that these rules could hinder the necessary investments in climate protection and social areas.

In the course of the hearing, the draft budget is then expected to be processed in the budget committee. The debate in the plenum begins on June 16, whereby the budget accompanying law is to be decided first; The final decision of the double budget is scheduled for June 18th.

Overall, it can be seen that the Austrian government is faced with the challenge not only to consider the EU requirements, but also to take into account the heated political debate and the diverse expert opinions in order to create a sustainable and future-oriented budget.