The Ministry of Finance in Austria has increased its deficit forecast for the 2024 budget to 3.3% of GDP, surpassing the Maastricht limit of 3%. 

This shift is attributed to a sluggish economic recovery, the impact of the flood disaster, and the rise in the climate bonus. 

This marks a notable decline from the March forecast, which projected a deficit of 2.9%.

Economic experts, including the Fiscal Council and the financial institutes WIFO and IHS, had already anticipated a deficit exceeding 3%, with the Fiscal Council projecting a figure of 3.4%, Vienna International News reports. 

Furthermore, Austria's debt-to-GDP ratio is now expected to rise to 79.3% in 2024, up from 77.8% in 2023. 

The revised forecast is attributed to several factors: firstly, the anticipated economic recovery has not materialised, leading to weaker tax revenues and higher government spending.   

In addition, the flood disasters have had a severe impact, with the full extent of the financial damage still uncertain.  

The increase in the climate bonus, introduced in response to rising energy costs, is also contributing to the growing deficit.  

Moreover, Austria's debt ratio, projected at 79.3% of GDP, significantly exceeds the EU's recommended limit of 60%.  

This could result in increased pressure from Brussels, potentially prompting calls for Austria to implement measures to reduce the deficit. If the economic situation fails to stabilise, there is a risk of further budget cuts, which could impact government investments and social benefits. 

Economic experts have cautioned that 2024 could be particularly difficult if the economy remains sluggish.  

In the coming days, leading research institutes WIFO and IHS are set to release their autumn economic forecasts, which will offer more clarity on the economic outlook. 

However, there is anticipation over whether Austria can bring its deficit back below the 3% threshold or if it will continue to exceed this level.