Austria’s rising national debt and weak economic growth are putting pressure on the country’s ability to deal with future crises. That’s the verdict from the European rating agency Scope, which says the government’s current budget plans are unlikely to stabilize the debt over the next five years unless further action is taken.
Recent global shocks — including the COVID-19 pandemic, the war in Ukraine, and economic struggles among key trading partners — have all hit Austria’s economy and state finances hard. Scope expects the economy to stagnate this year. In fact, Austria’s current economic output is only 1.7% higher than it was before the pandemic, well below the eurozone average of 6.5%.
Export-focused sectors like the car and steel industries are struggling amid tense trade relations between the U.S., EU, and China. Scope warns of unstable energy prices and rising tariffs. The agency forecasts that Austria’s economy will grow only around 1% per year over the next five years — much less than the 2% annual growth seen before the pandemic.
Austria ran a high budget deficit of 4.7% of GDP in 2024 — the third largest since 2006. Only during the 2009 financial crisis and the pandemic was the deficit higher. Rising living costs and higher spending on pensions and healthcare for the ageing population are likely to keep pushing the deficit up. Unlike in the years before the pandemic, when Austria often had a budget surplus (before paying interest on debt), it now needs to borrow just to meet basic obligations.
According to government estimates, pension spending alone will rise from €30 billion in 2024 to €38.2 billion by 2029. Scope says this can only be managed with tighter healthcare budgets and pension reforms.
The agency warns that the government’s current savings plan may fall short. If only €10.6 billion of the planned €14.6 billion in cuts are achieved, Austria may not meet its target to lower the deficit to 3% of GDP by 2028. Without further action, national debt could rise to 88% of GDP by 2030 — far above the 60% average of comparable countries.
