Budget – EU Deficit Procedure against Austria is ongoing
Brussels – The EU finance ministers officially decided at their last meeting before the summer break in Brussels to open an EU deficit procedure against Austria. The Council follows the recommendation of the EU Commission. The domestic fiscal structure plan was also finally approved. It outlines the measures and reforms to bring the budget deficit back below the allowed 3 percent threshold. Austrian Finance Minister Markus Marterbauer (SPÖ) is in Brussels.
Marterbauer emphasized before the Council that all further actions in the deficit procedure are clear: “We are being asked by the European Commission to present measures on how the excessive deficit, which is a legacy of the last government, can be reduced in the medium term. We have already made the corresponding decisions in the National Council with the double budget.” Austria is “on a very good path to reduce the deficit as planned.”
The reason for the deficit procedure is that Austria, with its budget deficit of 4.7 percent of GDP last year and the planned 4.5 percent this year, is clearly above the allowed limit of three percent of economic output according to the so-called Maastricht criteria of the EU. The EU Commission had determined an excessive deficit for Austria in early June in its spring package for the so-called European Semester and announced the recommendation of a procedure.
Deadline until October 15 for further measures
According to the Council recommendation proposed by the Commission, Austria is given a deadline until October 15, 2025, to take action and present the necessary measures. “After that, Austria should report at least every six months on the progress in implementing this recommendation, namely in the spring as part of its annual progress report and in the autumn in the draft budget plan, until the excessive deficit has been corrected,” it continues. And: “Austria should therefore eliminate the excessive deficit by 2028.”
According to plans, the budget deficit is to decrease to 4.5 percent of GDP this year and be 4.2 percent next year; by 2028, the government aims to exit the EU deficit procedure. The consolidation amount is to be 6.4 billion this year and 8.7 billion next year. Marterbauer emphasized on Monday that he had “no reason to doubt the achievement of the budget targets.” He also sees no “image damage” for Austria and no problems in the financial markets. Austria is “one of the strongest economies in Europe.”
FPÖ sees Austria as “partially disempowered”
“The initiation of the procedure does not come as a surprise. After a deficit of 4.7 percent of GDP last year and an expected 4.5 percent in 2025, this procedure was foreseeable and inevitable. With the decision on the double budget for 2025 and 2026, Austria has already taken important steps towards budget consolidation. In order to achieve the required undershooting of the 3 percent limit as planned in 2028, we must now also adhere to the agreed measures in practice,” said Finance Minister Marterbauer after today’s decision.
The FPÖ sees the responsibility for the deficit procedure primarily with the ÖVP, which it accused again on Tuesday of “deceiving voters” regarding the deficit development before the National Council election. With the deficit procedure, the three-party coalition has broken its first central election promise, said FPÖ Secretary General Christian Hafecker on Tuesday at a press conference. “Of course, this is a process that partially disempowers Austria, at least regarding financial behavior,” Hafecker responded to contrary assurances from the Finance Minister.
For the Industrial Association, the deficit procedure should not serve as an excuse to postpone urgent structural reforms: “Rather, the government must use the period of the deficit procedure to address these structural reforms in administration, education, pensions, and health. At the same time, efficient and thoughtful economic stimulus measures are also needed. We must use this window of opportunity wisely, not only to quickly balance the state budget but also to stimulate the economy through structural measures and finally prepare the state for the future. Otherwise, Austria risks being relegated to the regional league and entering a longer-term stagnation phase,” it says in a statement. (14.07.2025)
