VIENNA – Austria’s budget deficit will be 2.3% of economic output next year, falling below the European Union’s 3% limit and shrinking from 6% this year, as growth improves and the COVID-19 pandemic eases, the new national budget showed on Wednesday.
Like many of its peers, Austria spent lavishly on coronavirus-related aid to keep the economy afloat, particularly during last year’s pandemic-induced recession. So far it has spent or approved for disbursement 40.8 billion euros ($47.1 billion), more than 10% of last year’s gross domestic product.
Growth is returning this year, when it is now forecast to reach 4.4% and will accelerate to 4.8% next year, according to think-tank Wifo, upon whose figures the budget is based.
“We in Austria will return to a sustainable budget policy after the crisis,” Finance Minister Gernot Bluemel said in his annual budget speech to parliament. “This strong growth helps us achieve that and we must do everything to ensure this recovery is sustainable.”
Bluemel’s budget shows the country’s debt as a proportion of gross domestic product (GDP) falling to 79.1% next year from 82.8% this year, with the aim of reducing it to 72.5% in 2025, the year after the country’s next parliamentary election is due.
Whether the current coalition between Bluemel’s conservatives and the Greens will last that long is uncertain. His budget speech comes four days after conservative leader Sebastian Kurz stepped down as chancellor at the Greens’ behest over corruption allegations against him.