The Ministry of Finance is forecasting a deficit of 4.5% of GDP for this year. This value will be submitted to Statistics Austria today, which will then forward the figures to the European level. As the Ministry emphasizes in a written statement, this means that an EU deficit procedure can be expected, as the permitted limit of 3% will clearly be missed. However, it will be slightly below the 4.7% from 2024.
The projected deficit for 2025 is broken down as follows: the federal government will account for 3.5%, states and municipalities will contribute 1%, and social insurances are expected to balance out nearly. With the 4.5%, the Ministry’s estimate is still slightly higher than the Fiscal Council’s projection, which had estimated the deficit at 4.4% of GDP. The debt-to-GDP ratio is expected to be 84.7%, exactly matching the Fiscal Council’s forecast from last week.
The government has yet to finalize the assumptions for next year. These will be presented during the dual budget presentation in mid-May.
Consolidation Package Already Included
The Ministry of Finance’s fiscal forecast is based on internal budget control, tax estimates, and forecasts from the states, municipalities, and social insurances. The estimate also fully includes the government’s planned consolidation measures. Without these measures, the deficit would exceed 5%.
According to the Ministry, the weak economy plays a central role in the size of the deficit. The recession leads to lower revenues from cyclical taxes, such as corporate tax, and higher expenses, such as increased unemployment benefits. Additionally, rising interest costs and expenditure increases agreed upon by the previous government are significant factors.
Deficit Procedure Likely in July
The Ministry of Finance assumes that, as with other countries, an EU deficit procedure will be initiated. However, the decision will likely be made only in July at the Economic and Financial Affairs Council (Ecofin).
Finance Minister Markus Marterbauer (SPÖ) reiterated his commitment to maintaining the consolidation course through the agreed savings in the 2025/26 dual budget. The goal is to avoid putting too much strain on the economy and employment. A mix of savings, tax increases (e.g., on banks), long-term reforms, efficiency improvements, and offensive measures will be implemented.
“We will do everything step by step to reduce the overall state deficit: This is a nationwide effort,” he stated. The finalization of the budget is being worked on intensively. The budget speech is scheduled for May 13, and the dual budget is expected to be approved in June. The size of the consolidation package—€6.4 billion this year and €8.7 billion in 2026—is expected to remain unchanged.
NEOS Calls for Further Savings, Greens Against “Destructive Saving”
Even the greatest efforts in saving would not be enough to put Austria’s finances sustainably on solid ground, said NEOS Club Leader Yannick Shetty in a statement. Even if the economy recovers, there should be no return to old structures and mechanisms that contributed to the current crisis. Only then can space be created for real relief in the medium term. The figures concern everyone—federal, state, and municipal levels: “Therefore, we must look for potential savings opportunities at all levels.”
The figures underline the need for action, but they should not lead to misguided saving measures, warned Green Budget Spokesperson Jakob Schwarz. Especially now, targeted investments in the future are needed, and not destructive saving at the expense of climate and economy. The massive increase in the budget deficit is not only due to the weak economy but also structural problems, such as ballooning state and municipal finances.
