Tough Austerity Course Puts Austria on the Podium in EU Comparison
With its consolidation course, Austria is currently among the most frugal countries in the EU. The so-called Fiscal Stance - a measure of a state's fiscal policy orientation - is at 1.3 percent of GDP, placing Austria third among EU countries in terms of the strictness of its austerity policy. However, the need for austerity is not equally high everywhere.
Austria among countries with strictest austerity policy in EU
Eleven EU countries - including Austria - show a positive or restrictive Fiscal Stance according to the analysis, meaning their net expenditures are rising less sharply than potential growth. In 15 countries, it is the opposite; they pursue an expansive fiscal policy, and their Fiscal Stance is therefore negative. In Ireland, both values are balanced. The list is led by Denmark, which, with -2.6 percent, pursues the most expansive fiscal policy. The Nordic country can certainly afford this spending enthusiasm, having achieved a budget surplus of 4.5 percent of GDP in 2024.
Malta with most restrictive austerity policy
Malta, on the other hand, pursues the most restrictive austerity policy within the EU with a Fiscal Stance of 1.9 percent, followed by Romania (1.4) and Austria. All three countries need to rectify their out-of-control budgets, not least because of an ongoing deficit procedure by the EU against them. In contrast, Hungary, Belgium (both -0.4), and Poland (-0.3) seem less impressed by a deficit procedure, as they maintain an expansive fiscal policy.
According to forecasts by the EU Commission, Austria will continue to be among the frugal EU countries next year. With a Fiscal Stance of 0.3 percent, it is expected to rank sixth among the 27 member countries by 2026. The Momentum Institute views this critically. "Saving during a recession stifles the economy, leads to rising unemployment, and postpones necessary investments," warned Momentum Chief Economist Oliver Picek according to a press release, recommending exceptions to fiscal rules in times of crisis.
(APA/Red)
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