Consolidation necessary
Fiscal Council: Austria faces a high budget deficit
Austria spends more than the country earns. It’s been like this for a long time. But now things are starting to get serious, say experts at the Fiscal Council. A mammoth task for the future government.
According to the Fiscal Council, the budget deficit in Austria will climb to 4.1 percent of gross domestic product (GDP) next year. The debt watchdogs thus revised their latest forecast significantly upwards. The reason is the increase in government spending, but also lower income due to the recession and tax cuts. It was therefore likely that the EU would initiate an excessive deficit procedure, it was said at a press conference. According to the Maastricht rules in the EU, the budget deficit must not exceed three percent of economic output.
At the same time, Austria’s debt ratio will rise despite low interest expenses. The experts expect 79.7 percent (2024) and 81.6 percent of GDP next year. Here too, the country is well above the Maastricht reference value of 60 percent.
There is an urgent need for consolidation, said Head of the Fiscal Council Christoph Badelt to the future government. It is also important to pursue the path of consolidation “without destroying the tender shoots of economic recovery.” After the National Council election on September 29th, the conservative ÖVP and the social democratic SPÖ are exploring possible cooperation. An agreement is considered difficult.
dpa
Source: Stern
