Is Austria saving too little?

Christoph Badelt, the head of Austria's Fiscal Council, has voiced concerns that the country's planned consolidation measures are insufficient to meet its fiscal targets. While Finance Minister Markus Marterbauer is set to present the budget speech on June 10, with accompanying savings laws expected this week, Badelt believes more significant cuts are necessary.

Marterbauer announced that budget negotiations for the 2027/28 double budget are concluded, with allocations between ministries finalized. Known savings measures include a progressive increase in corporate tax for companies earning over one million euros from 2028, an extension of the stability tax for banks, restrictions on the profit allowance, and an increase in the real estate capital gains tax.

However, Badelt remains skeptical about the effectiveness of the announced 2.5 billion euro consolidation package. He estimates that over six billion euros in savings are required to reduce the budget deficit to 3% of GDP by 2028. Badelt emphasized that economists consider not only budget figures but also macroeconomic impacts, questioning the feasibility of unspecified "administrative savings."

The Fiscal Council previously projected deficits of 4% for 2026 and 4.1% for 2027. State debt is also expected to rise, with the council forecasting 85% of GDP in the coming year, up from 81.5% in 2025. The previous record high was 85.6% in 2015.

Economic conditions add to the challenge. While Austria saw a slight 0.2% GDP growth in the first quarter, companies remain largely skeptical due to the Iran conflict, according to the Wifo economic research institute. Wifo forecasts GDP growth between 0.2% for 2026.