Significant Increase in Budget Deficit Last Year

The budget deficit has seen a substantial rise compared to 2023. Last year, it stood at 2.6% of GDP, remaining within the Maastricht criteria. However, it escalated to 4.7% in the previous year, translating into a staggering 22.5 billion euros in absolute terms. The public debt reached 394.1 billion euros, which resulted in an increase in the debt ratio from 78.5% to 81.8%. According to EU regulations, a maximum of 60% is permissible.

Tobias Thomas, the head of Statistics Austria, stated that the government would have needed to reduce expenditures by eight billion euros to remain below the Maastricht threshold of 3%, which is critical considering the anticipated EU deficit procedure.

When examining the financial status of various governmental entities, it becomes evident that all sectors are operating at a deficit. The federal government saw its deficit rise from -1.9% to -3.5% of GDP, while the federal states, excluding Vienna, increased their deficit from -0.1% to -0.4%. Municipalities and social insurance providers, although maintaining rounded percentages at -0.5% and -0.2%, respectively, faced higher absolute deficits as well.

Interestingly, when excluding the capital city, municipalities overall showed balanced budgets. Kerstin Gruber from the Directorate of Economic Affairs of Statistics Austria explained that the results for municipalities were primarily influenced by Vienna. While other municipalities improved their financial results in 2024, Vienna's situation worsened by nearly 400 million euros. This decline can be attributed in part to significant investments in initiatives such as kindergarten expansion and subway development.

Other federal states also reported considerable deficits, with Styria showing a shortfall exceeding 525 million euros and Lower Austria at 486 million euros. Only Upper Austria managed to record a surplus of nearly 30 million euros. A significant portion of the total debt burden falls on the federal government, which accounts for 86.6% of overall debt.

According to Statistics Austria, the weak economic performance significantly contributed to this negative financial trend. Despite this, revenue has increased, largely due to substantial wage agreements that have subsequently boosted income from social security contributions and payroll taxes. The overall revenue ratio has reached 51.6%, a level comparable only to that of France and Finland within the EU.

The challenge lies in the fact that expenditures have risen even more sharply. Key factors driving this increase include salary adjustments and pensions, with approximately 40% of funds allocated to social security. A significant portion of this is directed towards elderly care. Health expenditures continue to be a major concern, experiencing a 6.3% increase last year, even after the pandemic. Defense spending remains relatively low, rising from 0.6% to 0.7% of GDP, primarily due to higher wage agreements.