Chris Gattringer
Austria’s public finances have deteriorated faster than even pessimists expected. On March 31 the Federal Statistics Agency published the final report on the country’s 2024 budget deficit. The shortfall amounts to 4.7 per cent of Gross Domestic Product (GDP) or €22.5 billion. Austria’s public debt rose to 82 per cent of GDP or €394 billion – equivalent to €43,000 per inhabitant.
The budget shortfall is more than 50 per cent higher than permitted by the EU’s Maastricht criteria, which include a ceiling for the budget deficit of 3 per cent of GDP. Austria has failed to meet this criterion for five years in a row.
The main causes of the gigantic shortfall are ballooning public expenditures which rose by 8.8 per cent in 2024, driven mainly by generous pension increases and pay increases for public servants under a coalition government of Conservatives (ÖVP) and the Greens Party. Meanwhile tax revenue only rose by 4.0 per cent despite one of the highest tax burdens in the EU. Austria is currently experiencing an extended recession, the longest since the end of the Second World War. The economy is expected to deteriorate further in 2025.
However, economists see reckless spending at the center of the budget crisis. Libertarian economist Franz Schellhorn wrote on X that despite record revenues the country was being led into the worst crisis in its younger history. “The problem is the government spending spree”, the head of the think-tank Agenda Austria continued.
The final deficit numbers mark the endpoint of a serious of negative revisions of the state of public finances over the last months. On October 3, just five days after the September general election, the ÖVP-run Finance Ministry raised its prognosis for the 2024 deficit from 2.9 to 3.3 per cent, even though Finance Minister Magnus Brunner (ÖVP) had previously claimed Austria would meet the Maastricht target. The ÖVP was widely accused of covering up the true extent of the budget crisis before the elections. Shortly afterwards even more pessimistic forecasts emerged. In December 2024 the Austrian National Bank already put the expected deficit at 4.1 per cent.
The final tally still comes as a shock to Austrians. Petra Steger, an MEP for the right-wing Freedom Party, accused ex-ÖVP finance minister Magnus Brunner of causing “the biggest financial-poltiical scandal of the Second Republic”. Brunner is currently serving as EC Commissioner for Internal Affairs and Migration. “Many generations will have to suffer under the consequences of this scandal”, Steger continued.
The newly appointed Austrian government now has to find measures to reduce the deficit to avoid an EU deficit procedure. Whether the coalition of Conservatives, Social Democrats and Liberals can agree on the necessary cuts remains doubtful. Austria’s new Finance Minister Markus Marterbauer (SPÖ) said on March 22 that an EU deficit procedure “would not be a catastrophe”. In response to the final deficit numbers Marterbauer said on March 31 that reducing the deficit would be a task for the entire society, stating that “everybody will have to chip in”.