So Long, Austrian Budget Deficit Exceeds EU Limits 'Til 2028: What's the Plan? 🇦🇺
Austria's budget shortfall persists beyond EU limit until 2028
Wanna learn about Austria's economic woes and their push towards austerity? Buckle up, buddy!
Here's the skinny: Austria's budget deficit will only dip slightly to 4.5% this year, per the Finance Ministry, and it'll stay above the EU's three-percent ceiling until at least 2028. That's right, the year 2028! By 2026 and 2027, it's expected to be a steep 4.2% and 3.5%, respectively (for the non-nerds out there, that's still above the limit).
But hold on tight, because the debt-to-GDP ratio is forecast to climb to 84.7% this year and peak at 87.0% in 2028 before nudging down to 86.9% in 2029.
You might be wondering, "Why the economic downfall, dude?" Well, it's all about the crummy economic development, my friend. Leading economic research institutes, Wifo and IHS, even predict a recession for 2025 – that's three years in a row of recession! As a result, tax revenues are dwindling, while government spending is on the rise.
So, what's Austria gonna do about it? They're cooking up a comprehensive austerity plan, entitled "Austrians, Get Ready to Chip In!" (okay, not really, but it sounds catchy). They're aiming to save a whopping total of 7.0 billion euros this year and an additional 10.3 billion euros in 2026. Finance Minister Markus Marterbauer (SPO) credits the situation as "serious," assuring everyone that "everyone will have to contribute."
Alright, alright, let's break down that austerity plan for ya:
- Cut the Subsidies: Say goodbye to generous subsidies amounting to 0.9 billion euros. That'll hit several sectors and beneficiaries, helping to cut spending.
- Goodbye Climate Bonus: Adiós to the climate bonus, an extra payment to households to make up for carbon pricing. This will supposedly save 2 billion euros.
- Adieu Paid Education Leave: Farewell to paid working hours for further education, depleting the coffers by 0.35 billion euros.
- Reduction in Subsidy Country Austria: The subsidy country Austria will be scaled back, aiming to reduce spending by 1.3 million euros.
- Freeze Family Benefits: Expect a halt in inflation-linked increases to family benefits starting from 2026. Households might be looking at losing hundreds of euros annually.
- Infrastructure Spending: Despite the austerity measures, Austria will still shell out 19.7 billion euros for infrastructure investment from 2025 to 2030, including funding for Austrian Federal Railways (ÖBB).
- Defence Budget Increase: The defence budget will swell with increases of 349 million euros in 2025 and 370 million euros in 2026, but administrative expenses will be slashed.
- Revenue Income Boost: The government plans to boost revenue through special dividends from state-owned companies (1.6 billion euros in 2025), a temporary hike in the stability tax, and the abandonment of tax breaks for photovoltaic systems.
Now, the primary motive behind these measures? Simple. Reduce the budget deficit below 3% of GDP and stave off an EU deficit procedure. The plan embodies a shift towards austerity to tackle fiscal challenges exacerbated by inflation-linked expenditures and reduced public revenue due to tax reforms.
Source: ntv.de, RTS
P.S. For additional deets on the plan, don't hesitate to explore the key measures and objectives mentioned above. 😉
- In an attempt to address budget deficit concerns, Austria is considering modifications to both their community policy and employment policy, with evaluations of possible reforms in vocational training.
- To balance their finances, Austria's government is planning to make adjustments in various industries, including a potential reduction in subsidies for businesses that could lead to changes in employment policy.
