(Bloomberg) -- Austria said a sharper economic downturn and spending related to recent floods are likely to push its budget deficit past European Union limits, adding to urgency for belt-tightening following federal elections.
The budget deficit is expected to widen to 3.3% of estimated gross domestic product this year from 2.7% in 2023, the finance ministry in Vienna said by email. That compares with a shortfall of 2.9% of GDP projected for this year in March.
The ministry cited weak economic performance that’s set to lower tax revenues, as well as spending related to recent flooding and handouts to millions of residents aimed at offsetting a carbon levy.
Economists, as well as Austria’s independent Fiscal Advisory Council, estimate that budget balancing measures will be required after elections held Sept. 29.
Coalition negotiations haven’t officially started, and it may take at least several weeks before a new government is in place.
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