Expanded budget deficit persists
In the heart of Europe, the Fiscal Council President, Christoph Badelt, has raised concerns over the Austrian government's 2025 budget draft. The coalition government, led by Chancellor Christian Stocker and Vice Chancellor Andreas Babler, which took office in 2025, has come under scrutiny for its spending plans.
Badelt has been vocal about the need for a more responsible approach to budgeting. He did not oppose the abolition of cold progression, a tax system where high earners pay a higher percentage of tax, but questioned its simultaneous abolition without any adjustments to spending.
The Fiscal Council President also highlighted a reciprocal relationship between the media and public sentiment as a factor exacerbating this issue. He emphasised that the government must take responsibility for providing clear and accurate information to the public, as misinformation can lead to unrealistic expectations and pressures on the budget.
Badelt urged the government to create a new program outlining their priorities, as many projects are subject to budget constraints. He believes that economic policy cannot just consist of repairing the budget; there must be a strategic plan in place to ensure that resources are allocated effectively.
After budget consolidation, Badelt suggested that the government should focus on structural reforms. He believes that these reforms are necessary to address the underlying issues that have led to budget deficits in the first place.
The National Council election campaign in 2025 was characterised by a focus on relief and tax cuts, with little clarity on how spending would be managed. This lack of transparency has raised concerns among fiscal watchdogs like Badelt, who believe that the lack of credibility in politics, as revealed through budget data, threatens democracy.
Badelt stated that the most urgent task for the government is to finalise the 2025/26 budget consolidation. He criticised the previous government for ignoring the financial implications of the abolition of cold progression and the increase in spending, which has left the current government with a challenging task.
As the Austrian government navigates these challenges, the eyes of the Fiscal Council and the public will be on them, eager for signs of responsible fiscal management and a commitment to long-term economic stability.
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