Public Finances 2020: Government expenditure ratio increase sharply and government revenue ratio decrease, government deficit is at 8.9% of GDP

In 2020, Austria's government deficit amounted to 8.9% of gross domestic product (GDP) or €33.2 bn, the highest deficit since records began in 1954. At the end of 2019, a surplus of €2.4 bn or 0.6% of GDP was achieved. Government expenditure rose by 12.6% or €24.4 bn, while government revenue decreased by 5.8% or €11.3 bn. In relation to GDP this results in the following ratios in 2020: revenue 49.0% (2019: 49.2%), expenditure 57.9% (2019: 48.6%), government deficit 8.9% (2019: surplus 0.6%).

Detailed data for these ratios is taken from Statistics Austria’s compilation of public finances, as of 1 April 2021. Basis for the 2020 results are the provisional annual public accounts for federal government, quarterly data for state and local government units as well as the provisional Finance Statistics of the Umbrella Association of Austrian Social Security Funds. A first estimate of the numerous extra-budgetary units was made based on individually available information.

Total government expenditure increased by 12.6% (+€24.4 bn) in 2020 and stood at €217.4 bn. The strongest increase showed subsidies (+€14.1 bn or +240.7%). This is mainly due to Corona support packages (short-term work scheme, fixed cost subsidy, turnover-substitute etc.). 43.0% of government expenditure was related to social expenditure (+7.5%). Compensation of government employees, which constitutes around 20% of government expenditure, increased by 2.1% (+€0.9 bn). Intermediate consumption (around 12% of government expenditure) rose by 3.4%. Gross capital formation showed an increase to €12.9 bn in 2020. Interest expenditure declined sharply (-10.0% or -€0.6 bn).

Total government revenue decreased by 5.8% (-€11.3 bn) in 2020 and stood at €184.2 bn. The strongest decrease showed social contributions and taxes (-€9.8 bn). Revenue from taxes on production and imports (including value added tax) fell by 6.4% or €3.5 bn. Revenue from current taxes on income and wealth decreased sharply by 11.3% or €6.2 bn in 2020. This is mainly due to lower income from corporate tax (-€2.8 bn), income tax (-€1.8 bn) and wage tax (-€1.0 bn). Social contributions decreased by 0.2% (€100 mn). 8.9% of government revenue stem from sales, amounting to €16.4 bn in 2020. Further information can be found under tax revenue and social contributions of general government.

Quarterly figures: High public deficit again in the first quarter of 2021

In the first quarter of 2021, a public deficit of €9.0 bn was recorded, accounting for 9.9% of the quarterly Gross Domestic Product (GDP). Compared to the first quarter of 2020 (2020Q1: €1.6 bn resp. 1.7% of quarterly GDP), this figure has increased by €7.4 bn resp. 8.2% and thus, almost to the sixfold.

Compared to 2020Q1, General Government revenue decreased by 1.7% resp. €0.7 bn (2021Q1: €43.6 bn, 2020Q1: 44.4 bn), but General Government expenditure grew by 14.5% resp. €6.7 bn (2021Q1: €52.6 bn, 2020Q1: €46.0 bn). Within the same period, the GDP decreased by 3.6% resp. €3.4 bn (2021Q1: €90.7 bn, 2020Q1: €94.1 bn).

The detailed figures of these results are compiled by short term public finance statistics in Statistics Austria and have been released on June 30, 2021. The results for 2021Q1 are based on preliminary accounting results of central, regional and local governments and of social security funds. Other units of General Government have been estimated.

88,3% of General Government revenue in 2021Q1 resulted from taxes and social contributions, which added up to €38.5 bn. Compared to 2020Q1, this figure decreased by 1.2%, which represents €0.5 bn.

The largest decreases in value for General Government revenue in the first quarter of 2021 in comparison to 2020Q1 were primarily to be seen in current taxes on production and imports (-3.4%, resp. €-0.4 bn) and in taxes on income, wealth, etc. (-2.7%, resp. €-0.3 bn). On single tax level, the largest losses have been observed for the value added tax (-5.4%, resp. €-0.4 bn) and the income tax (-38.3%, resp. €-0.3 bn).

In 2021Q1, about 43% of General Government expenditure applied to social transfers (monetary benefits and transfers in kind), 19% applied to compensation of employees, 12% to intermediate consumption and 10% to subsides, all other expenditure items stayed below 9% of total expenditure.

About half of the increase of General Government expenditure in the first quarter of 2021 is due to a raise of subsidies (177.1%, resp. €3.3 bn), this includes payments for furlough schemes and other subsidies like "Fixkostenzuschuss" or “Umsatzersatz”. Also other current transfers (53.6%, resp. €1.5 bn) and social benefits other than social transfers in kind (7.4%, resp. €1.3 bn) have increased, the latter due to higher payments for unemployment benefits and social benefits in hardship cases ("Härtefallfonds"). Since final data are not available for the Covid 19 measures, estimations have been applied, which will be adjusted to the latest level of knowledge in every publication.