
The far-right Freedom Party (FPÖ) and the People’s Party (ÖVP) have agreed on a budget plan aimed at avoiding an EU deficit procedure without introducing tax increases, as the two parties move closer to forming Austria’s next government.
The announcement came on Monday during the first joint press conference held by FPÖ leader Herbert Kickl and ÖVP chairman Christian Stocker. Should their negotiations succeed, it would mark the first FPÖ-led government in Austria’s modern history.
The proposed FPÖ-ÖVP coalition follows the collapse of talks earlier this month to form a centrist government involving the ÖVP, the Social Democrats (SPÖ) and NEOS.
Under the plan, Austria aims to save €6.4 billion in 2025. Stocker explained that these measures would bring the deficit below 3% of GDP, in line with EU regulations. The budget consolidation will span seven years.
Addressing the press, Kickl, who hopes to become Austria’s next Chancellor, praised how quickly the talks had moved forward and criticised the failed centrist negotiations. “What wasn’t possible in 100 days under a different constellation, we achieved in three days of good, intensive negotiations,” he said.
Measures to Address Tax Evasion
While details were sparse, Kickl highlighted measures to tackle tax evasion and close loopholes. He also vowed to end “overfunding” while ruling out increases in mass taxes such as VAT or fuel tax. “Anyone who believes new taxes will help is no doctor, but a charlatan,” he said.
According to a document seen by the Austria Press Agency (APA), €920 million is expected to be raised through tax measures. However, the largest savings – €3.2 billion – are anticipated to come from cuts to public subsidies. These could include the abolition of the climate bonus (Klimabonus) scheme and educational leave (Bildungskarenz).
An additional €1.1 billion is set to be saved through a “stability contribution” from federal ministries, with the remaining savings coming from efficiency reforms and other measures. Further details are expected to be announced later this week.
Kickl also outlined other priorities for the future government, including increased support for families, stricter asylum policies, and reforms to Austria’s public broadcaster, ORF.
Formal Declaration Planned
The agreement will be formalised in a “political declaration of intent,” which Kickl and Stocker will sign. Finance Minister Gunter Mayr is expected to present the plan to EU officials in Brussels to avoid a potential deficit procedure.
The proposal commits Austria to reducing its deficit to below the EU’s 3% threshold by 2025, with savings totalling €6.39 billion.
Opposition Criticism
The Greens, currently the junior coalition partner in the outgoing ÖVP-led government, criticised the lack of transparency in the plan. “This press conference was full of vague statements, keeping the public in the dark,” said Jakob Schwarz, the party’s budget spokesperson. He also argued that scrapping the climate bonus would amount to a hidden tax hike.
The SPÖ also voiced concerns over the plan’s lack of specifics. “Kickl’s proclaimed ‘new honesty’ has turned into ‘more of the same’ within days,” said Jan Krainer, the party’s budget spokesperson. He called on Finance Minister Mayr to provide Parliament with full details of the proposals submitted to the EU.
EU Commission Awaits Details
The European Commission is still waiting for Austria to submit its proposed measures. Finance Minister Mayr is scheduled to meet Valdis Dombrovskis, the EU Commissioner for Economic Affairs, on Tuesday.
Although the budget plan is not officially on the agenda, it is expected to be discussed. A Commission spokesperson confirmed that the measures must be submitted before the Economic and Financial Affairs Council meeting on 21 January. If deemed sufficient, the deficit procedure can be avoided. EU ministers will make a final decision based on the Commission’s recommendations.