Fiscal Council alarmed
Budget deficit higher than expected in 2024
The budget deficit is likely to be higher than recently forecast: The Fiscal Council expects a shortfall of 3.9 percent this year and 4.1 percent of gross domestic product (GDP) next year.
In spring, they were still forecasting a shortfall of 3.4 percent (2024) and 3.2 percent (2025). The Fiscal Council therefore considers it "likely" that the EU will initiate an excessive deficit procedure, according to a press release.
"Economic policy measures" are fueling the deficit
The debt watchdogs cite "long-term economic policy measures" such as the reduction in corporation tax, the abolition of cold progression, the "overcompensation of the CO2 tax through the climate bonus" or the long-lasting budgetary burdens caused by COVID-19 economic stimulus measures such as the investment premium, as well as the ongoing recession, as reasons for the high deficits.
In addition, there would be increases in expenditure as part of the new financial equalization scheme, such as the Future Fund, the sharp increases in military spending and investments in rail infrastructure, as well as demographically induced structural increases in expenditure for care, healthcare and pensions.
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