With the imminent start of new government negotiations between the FPÖ and ÖVP, the game of budget restructuring begins again. Austria must notify a restructuring plan to Brussels by January 21, otherwise there is a risk of excessive deficit procedures. The fact that the EU will be involved in budget decisions in the coming years will not be in the FPÖ’s interest.
The FPÖ and ÖVP will have to put budget restructuring above all else and try to draw up a rough plan before the deadline that will be sent to Brussels. The Eurogroup will meet there on January 20 and EU finance ministers will meet on January 21. It will be decided whether to open a possible deficit procedure against Austria.
Depending on the scenario, the consolidation need for the next federal government is between 18 and 24 billion euros. For the four-year reference path without the EU deficit procedure, a total consolidation need of EUR 24.1 billion applies, with annual savings of around EUR 6 billion. In the seven-year reference trajectory without procedures, the consolidation need at the end of the term is 18.1 billion; with procedures this is 18.4 billion (see graph).
Deficit well above the Maastricht limit of three percent
The economic researchers from WIFO and IHS predict a budget deficit of 4.2 and 3.8 percent of economic output for 2025. According to WIFO, a reduction from 4.2 to 3 percent of gross domestic product (GDP) would correspond to a consolidation need of “approximately 6 billion euros”. The debt mountain of around 420 billion euros already amounts to more than 80 percent of GDP. According to the experts, the increase in the deficit is the result of the indexation of social benefits, a sharp increase in the number of pensioners and increasing expenditure by states and municipalities in the areas of the environment, housing, education and health care.
The Minister of Finance sees a lot of potential in the financing
Interim Finance Minister Gunter Mayr is against a procedure because Austria would have less room for maneuver and Brussels would have a seat at the table in all decisions. Mayr sees many opportunities for savings in the field of subsidies. Here Austria is three billion above the EU average. “There really is a lot of potential here in terms of spending,” Mayr analyzes.
Fiscal consolidation remains the most pressing problem
After much back and forth, the negotiators in the three-party coalition decided on a seven-year consolidation process without a deficit procedure. The FPÖ and ÖVP will also have to decide quickly. “Budget restructuring remains the most urgent issue,” emphasizes WIFO budget expert Margit Schratzenstaller to the “Krone”. The European Commission said on Tuesday that it was waiting for proposals for measures to reduce the budget deficit. “If these measures are submitted in a timely manner, we can review them and then recommend to the council not to initiate the process,” a spokesperson said.
Source: Krone
I am Ida Scott, a journalist and content author with a passion for uncovering the truth. I have been writing professionally for Today Times Live since 2020 and specialize in political news. My career began when I was just 17; I had already developed a knack for research and an eye for detail which made me stand out from my peers.
