Austria before EU deficit: Finance Minister Marterbauer remains calm!

Austria before EU deficit: Finance Minister Marterbauer remains calm!

Vienna, Österreich - Austria is about to initiate EU deficit procedure, which is expected to take its course on July 8, 2025. Finance Minister Markus Marterbauer (SPÖ) confirmed this in the Federal Council. Despite this impending measure, Marterbauer expressed himself optimistic and explained that he was "no fear" of the deficit procedure at all. According to him, this means an ongoing exchange of information with the EU and no "visual administration" of the country. He also emphasized that he did not expect a negative effect on the rating of Austria and that the interest rate surcharges for government bonds compared to Germany have decreased slightly since the presentation of the double budget.

The budget deficit in Austria was 4.7 % of gross domestic product (GDP) last year, and for 2025 a new debt of 4.4 % to 4.5 % is assumed. Austria thus exceeds the permitted three percent limit of the EU. The government plans to get out of this deficit procedure by 2028. Processes are also threatened against several other EU countries such as Belgium, France and Italy that currently have similar problems.

The fiscal context

The fiscal council had already predicted a deficit of 4.1 % for 2025 at the end of 2022. The new government faces a "budget -like" that is twice as large as expected. An additional savings package of 11 to 12 billion euros would be required to push the deficit outlook under the critical brand. To achieve this, the federal government plans to implement the agreed savings of 6.4 billion euros by May 13th.

However, the economic forecasts for Austria have deteriorated. The Austrian National Bank (OENB) has corrected its growth forecast downwards, which entails additional challenges for fiscal stability. The Institute for Higher Studies (IHS) and the Austrian Institute for Economic Research (WIFO) have also confirmed that the budget deficit will be above the Maastricht criteria.

political reactions

In the political ranks there are different views on the situation. The ÖVP, which pursued a hard line against a deficit process during the coalition negotiations, now shows a changed attitude. State Secretary Barbara Eibinger-Miedl (ÖVP) emphasized that if necessary, a deficit process could be avoided so as not to endanger the economy with drastic measures. This pragmatic approach could be decisive considering the economic uncertainties.

In addition, Federal President Alexander Van der Bellen warned of the challenges of a possible recession. He emphasizes the need to show tact at spending cuts so as not to endanger economic stability. This illustrates the pressure under which Austria stands, while it has to be prepared for EU fiscal rules, provide for the strict guidelines for new debt and debt levels.

Austria is not only in this situation. Countries such as Luxembourg, Estonia and Sweden have never gone through a deficit process, while Austria was already in such a process that was ended in 2013. Today seven EU countries go through an excessive deficit procedure, and Austria could soon add if measures are quickly taken to consolidate the budget.