On 24 June 2026, the Council of the European Union adopted a recommendation outlining specific economic, social, employment, structural and budgetary policies for Austria, urging the country to adhere to net expenditure growth limits and advance reforms and investments under its medium-term fiscal-structural plan.
The recommendation, based on a Commission assessment, sets maximum net expenditure growth rates for Austria at 2.6% in 2025, 2.2% in 2026 and 2027, 2.0% in 2028, and 2.3% in 2029, with cumulative growth from the 2024 base year reaching 11.9% by 2029. The excessive deficit procedure for Austria has been held in abeyance since 3 June 2026, following the Commission's finding of effective action. On 17 February 2026, the Council had allowed Austria to deviate from recommended net expenditure growth rates for 2025-2028 due to increased defence spending under the national escape clause.
Austria submitted its 2026 Annual Progress Report on 29 April 2026, covering adherence to expenditure limits, reform and investment implementation, and excessive deficit procedure action. The report shows that net expenditure grew by 2.0% in 2025 (below the recommended rate) and is projected to grow by 2.1% in 2026 (also below the recommended rate). Real GDP growth was 0.6% in 2025, projected at 0.6% in 2026 and 0.9% in 2027. HICP inflation stood at 3.6% in 2025, projected to decline to 3.0% in 2026 and 2.5% in 2027. The general government deficit decreased from 4.6% of GDP in 2024 to 4.2% in 2025, projected at 4.1% in 2026 and 2027. General government debt rose from 80.0% of GDP at end-2024 to 81.5% at end-2025, projected to reach 83.4% by end-2026 and 84.9% by end-2027.
The Council notes that implementation of key reforms and investments due by 30 April 2026 is broadly on track, and Austria has complied with commitments in a satisfactory manner. However, the country faces challenges from demographic ageing (public pension expenditure at 14.5% of GDP in 2025), healthcare and long-term care cost-inefficiencies, a complex fiscal framework, a tax mix heavily reliant on labour, and underdeveloped venture capital markets. The government adopted the third Research, Technology and Innovation Pact for 2027 to 2029 with around EUR 5.5 billion in total funding.
The recommendation impacts several stakeholders. Austrian taxpayers may face continued fiscal consolidation, while businesses could benefit from reforms to taxation and innovation financing. Pensioners and healthcare users may be affected by measures to address cost-inefficiencies and demographic pressures. The EU institutions will monitor Austria's compliance with the recommended fiscal path and structural reforms.