“Times are tough”

Budget: Finance Minister lays his cards on the table

Finance Minister Markus Marterbauer aims to use his two-year budget to bring Austria out of the EU deficit procedure.(Bild: APA/ROLAND SCHLAGER)

(Bild: APA/HELMUT FOHRINGER)

Until the very last moment, the coalition parties were wrangling over the final details of the two-year budget for 2027 and 2028. With this budget, the government aims to achieve “economic recovery, fairness, and reforms”—and also to exit the EU deficit procedure. It is intended to be a “budget in a crisis,” but not a “crisis budget.” Finance Minister Markus Marterbauer (SPÖ) is currently delivering his budget speech, which he opened with the following words: “Times are serious.”

Just as the federal government’s efforts had begun to bear “first fruits” and the country was “nearly over the hump,” the war in Iran has once again brought inflation and an economic slump. “The energy crisis is hitting us at the worst possible time,” Marterbauer emphasized, noting that without the conflict in the Middle East, the inflation rate would have been just 2.3 percent in March 2026, 2.4 percent in April, and under three percent in May as well. “But we will not be discouraged!” Marterbauer set the course.

“We cannot promise calm seas. That is not within our power. But we promise that we will steer the ship reliably; that we will do what is necessary to bring the ship into a safe harbor,” the minister explained. The path to fiscal consolidation will continue—with structural reforms and, at the same time, extensive proactive measures. These concern the reduction of non-wage labor costs, the education sector, and long-term care.

Among the guests in the gallery were Federal President Alexander Van der Bellen, the President of the Court of Auditors, and former Federal President Heinz Fischer.

A deficit of 3.5 percent of GDP is targeted for next year. By 2028, the goal is to return to the 3 percent limit permitted by the EU. In total, around 2.5 billion euros are to be saved on the expenditure side. An additional 2.5 to 2.6 billion euros are to be allocated for “proactive measures” (see also charts below).

U-turn on party funding
Recently, there has been a great deal of commotion surrounding party funding. After the “Krone” revealed the ÖVP and SPÖ’s plan to increase party funding by one percent, the government faced fierce criticism. “While budget cuts are being made for pensioners, families, civil servants, and students, the parties want to enrich themselves,” was the general sentiment. By Monday, it became clear that the government would likely have to backtrack.

Instead of increasing party funding, they wanted to “only” increase parliamentary group funding (which amounts to 29.8 million euros this year). On Tuesday, a summit of the three governing party leaders—Christian Stocker, Andreas Babler, and Beate Meinl-Reisinger—at the Chancellery brought about the final turnaround: Neither party, parliamentary group, nor academy funding will be increased over the next two years.

This year, the three funding categories total 80 million euros. Politicians’ salaries are reportedly set to increase by one percent in 2027. The opposition certainly welcomed the reversal, but many other plans are already causing “massive concerns” in advance, as FPÖ budget spokesperson Arnold Schiefer put it on Tuesday.