Budget Policy Still Dominated by Fiscal Consolidation Needs

The 2027-28 federal budget introduces further consolidation measures to ensure compliance with the budget path set out in the Fiscal Structural Plan. These are accompanied by additional proactive measures in the areas of labour market policy, long-term care, education, and childcare, as well as a significant reduction in non-wage labour costs. The bulk of the additional consolidation will come from the revenue side. The general government deficit is expected to stabilise at just under 3 percent of GDP starting in 2028; as a result, the debt-to-GDP ratio will continue to rise to 85 percent of GDP by 2031. Structural reforms are indispensable to simultaneously ensure fiscal sustainability and enable spending in key areas for the future.