Excessive Deficit Procedure for Austria Increasingly Likely
An improvement in the fiscal deficit to around 4.0% of GDP is expected this year, exceeding the 3% Maastricht threshold and likely triggering an EU Excessive Deficit Procedure. Consolidation measures already committed to and co-ordinated with the European Commission are likely to be broadly sufficient to meet consolidation targets for 2025/26. We expect the deficit to improve slightly to around 3.7% of GDP in 2026.
The elevated 2024 deficit reflects structural pressure points related to high pension and healthcare costs. Age-related costs will rise by around two percent of GDP by 2030, according to the IMF. Austria operates a generous pay-as-you-go pension system, and a series of special pension hikes between 2018-23…
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