The People’s Party (ÖVP) and the Social Democrats (SPÖ) have reached a budget agreement aimed at avoiding an EU deficit procedure, as negotiations to form the next government continue.
Under the deal, the government will adhere to the budget plan previously submitted to Brussels during talks between the far-right Freedom Party (FPÖ) and the ÖVP, which collapsed earlier this month.
The plan includes savings of €6.4 billion in 2025, rising to €8.4 billion in 2026.
It is still unclear whether the agreement includes scrapping the climate bonus and education leave or raising the retirement age, which had been agreed between the FPÖ and ÖVP.
Under EU rules, member states exceeding the 3% deficit threshold risk being placed under the Excessive Deficit Procedure (EDP). This could lead to penalties, including a fine of 0.2% of GDP and the suspension of EU development funds.
Higher Taxes and Pension Contributions
Under the ÖVP-SPÖ plan, banks and energy firms will face additional levies, while pensioners will see an increase in their health insurance contributions.
ÖVP interim leader Christian Stocker and SPÖ leader Andreas Babler are expected to brief President Alexander Van der Bellen on the agreement on Thursday, with a public announcement likely before the weekend.
