Austria's new finance minister has warned that forecasts predicting a third consecutive year of economic contraction may require the government to implement further budget consolidation measures.
“We need to assume that the next forecast will be negative, and that will have an impact on tax revenues and the budget balance. The government has agreed to assess the situation based on the new forecasts,” said Markus Marterbauer ahead of a meeting with his European Union contemporaries in Brussels.
Austria's government plans to reduce the budget deficit by €6.3 billion this year, based on 0.6% growth in 2025, as forecasted by the Wifo research institute. Updated projections will be released on 27th March, Bloomberg reports.
In addition, Austria's newly formed coalition government, consisting of conservatives, social democrats, and liberals, is focusing on maintaining the EU's budget deficit limit of 3% of GDP to avoid penalties.
This agreement comes after five months of negotiations and follows the far-right Freedom Party's surprising electoral success. The government aims to reduce the budget deficit by €6.3 billion, assuming modest economic growth for 2025.
Furthermore, Austria plans to raise additional funds through higher levies on banks and energy companies while reducing subsidies related to green transition efforts.
This strict fiscal approach contrasts with Germany's push to reform its budget rules to allow large investments in infrastructure and defence worth hundreds of billions of euros.
Marterbauer previously served as the chief economist at the Chamber of Labour before becoming Austria's finance minister earlier this month. His appointment comes as the country works on fiscal reforms amid broader European budgetary challenges.