The hat is on fire when it comes to Austrian public finances, warns budget watchdog Christoph Badelt. Debt will rise sharply by 2028, the deficit is too high and reforms are lacking. There should be no election sweeteners now, and the next government will not be able to avoid years of billions in austerity packages, he demands.
“The situation is really problematic,” said Badelt, who as head of the Budget Council examines the state’s financial situation. This year can actually be ticked off, but the prospects for the coming years are even worse. That is why there should be no quick election treaties and the next government must immediately start with austerity packages, Badelt demands.
“We urgently need fiscal consolidation to give us the space to tackle the next crisis and make more socio-environmental investments. If they start with a deficit of ten to twelve billion euros, then they do not have this space.”
The pressure also comes from outside: according to EU budget rules, Austria must present a plan by September to return to the public debt ceiling of 60 percent of GDP – this year we will rise to 78.5 percent, and the budget The Council even expects this in 2028 with a further increase to 82.4 percent.
To at least come close to the mentioned 60 percent, “we will have to supply 0.5 percent of GDP for four years, which amounts to about 2.5 billion euros per year,” says Badelt, while quantifies necessary austerity measures. Unfortunately, there are currently no visible efforts at all; the Budget Council actually gives the Minister of Finance a five on the report card: the abolition of the cold progression of payroll taxes and the inflation adjustment of certain social benefits were carried out without countermeasures. financing and therefore automatically drives up the deficit.
Continued additional spending on health care, health care and pensions could in fact “continue”, there would no longer be any discernible ambition on the part of federal, state and local authorities to consolidate budgets, and there would be significant risks arise from climate change. (e.g. the threat of fines, environmental damage) would arise. Expect financing needs, structural reforms stall.
More expenses than income
Overall, “the dynamics of expenditure are therefore higher than that of income,” Badelt soberly summarizes. The direct consequence is that Austria’s financial rating will deteriorate and we will therefore have to pay higher interest rates on the growing national debt. This year it is already 1.4 billion euros more than in 2023.
The Fiscal Council therefore demands that the incoming federal government immediately develop a comprehensive consolidation plan to balance revenues and expenditures. Economy brakes are preferred because they have a more lasting effect. All savings potential must be utilized, for example by abolishing double subsidies.
Future economic policy measures should no longer be taken without counter-financing in other areas, and climate policy should be targeted in order to reduce financial risks (e.g. due to environmental damage, certificate purchases) for the budget.
At least: unlike seven other EU countries such as France and Italy, Austria is currently not on the “blacklist” of states against which Brussels has already initiated proceedings for excessive new debts.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
