Austria's economic outlook has taken a pessimistic turn, with the Austrian National Bank (OeNB) forecasting a budget deficit of 4.1% of GDP for 2025, up from the 3.3% predicted in June.

This would require €7.1 billion in savings to meet the EU's Maastricht target of 3.0%.

The deficit increase is attributed to delayed adjustments in pensions and public wages to inflation, as well as a weak macroeconomic environment.

The OeNB also predicts slow economic growth, with only 0.8% expected in 2025, and rising unemployment, reaching 7.4%.

Structural issues, high energy costs, and increased labor expenses are further straining Austria's competitiveness.

Experts warn that achieving fiscal consolidation will be painful and could dampen growth by 0.3-0.4 percentage points annually.

The National Bank emphasizes the urgency of clear government decisions to address these challenges, while also hinting at the possibility of longer working lives to ease pension burdens.

The road ahead for Austria's economy appears fraught with tough choices and potential reputational risks.