Public Finances 2020: Government expenditure ratio increases sharply and government revenue ratio decreases, government deficit is at 8.3% of GDP

In 2020, Austria's government deficit amounted to 8.3% of gross domestic product (GDP) or €31.5 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 has risen by 12.1% or €23.4 bn, while government revenue decreased by 5.4% or €10.6 bn. In relation to GDP this results in the following ratios in 2020: revenue 48.7% (2019: 49.2%), expenditure 57.1% (2019: 48.6%), government deficit 8.3% (2019: surplus 0.6%).

Detailed data for these ratios is taken from Statistics Austria’s compilation of public finances, as of 30 September 2021. Basis for the 2020 results are the final annual public accounts for federal government, state and local government as well as the final Finance Statistics of the Umbrella Association of Austrian Social Security Funds. Data on the numerous extra-budgetary units stem from individually available information.

Total government expenditure increased by 12.1% (+€23.4 bn) in 2020 and stood at €216.4 bn. The strongest increase showed subsidies (+€13.3 bn or +226.2%). 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 (+7.3%). Compensation of government employees, which constitutes around 20% of government expenditure, increased by 2.9% (+€1.2 bn). Intermediate consumption (around 12% of government expenditure) has risen by 4.4%. Gross capital formation showed an increase to €12.9 bn in 2020. Interest expenditure declined sharply (-10.3% or -€0.6 bn).

Total government revenue decreased by 5.4% (-€10.6 bn) in 2020 and stood at €184.9 bn. The strongest decrease showed social contributions and taxes (-€9.5 bn). Revenue from taxes on production and imports (including value added tax) fell by 6.0% or €3.3 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 0.1% (€50 mn). 9.0% of government revenue stem from sales, amounting to €16.7 bn in 2020. Further information can be found under tax revenue and social contributions of general government.

Quarterly figures: Public budget shows low deficit in the third quarter of 2021

In the third quarter of 2021, a relative low public deficit was recorded, amounting to €0.4 bn, which equals 0.4% of the quarterly Gross Domestic Product (GDP). Compared to the third quarter of the previous year, this figure has been reduced by €4.7 bn resp. 4.9% of GDP (2020Q3: public deficit of €5.1 bn resp. 5,3% of GDP).

Whereas General Government revenue increased by 11.2% resp. €5.1 bn compared to 2020Q3 (2021Q3: €50.5 bn, 2020Q3: €45.4 bn), General Government expenditure heightened by only 0.8% resp. €0.4 bn (2021Q3: €50.9 bn, 2020Q3: €50.5 bn). Within the same period, the GDP increased by 8.1% resp. €7.8 bn (2021Q3: €104.5 bn, 2020Q3: €96.7 bn).

In the first nine months of 2021, the public deficit reached €14.3 bn, which accounts for 4.8% of the quarterly GDP, while in Jan-Sep 2020 the public deficit amounted to €17.5 bn resp. 6.3% of GDP. General Government revenue increased by 8.0% resp. €10.8 bn compared to the first nine months of 2020 (2021 Jan-Sep: €145.0 bn, 2020 Jan-Sep: 134.3 bn), while General Government expenditure increased by 4.9% resp. €7.5 bn (2021 Jan-Sep: €159.3 bn, 2020 Jan-Sep: €151.8 bn). Within the same period, the GDP increased by 6.0% resp. €16.9 bn (2021 Jan-Sep: €296.3 bn, 2020 Jan-Sep: €279.4 bn).

The detailed figures of these results are compiled by short term public finance statistics in Statistics Austria and have been released on December 30, 2021. The results for 2021Q3 are based on preliminary accounting results of central, regional and local governments and the social security funds. Other units of General Government have been estimated on the basis of available information.

87.3% of General Government revenue in 2021Q3 resulted from taxes and social contributions, which added up to €44.1 bn. This total increased by 11.9% resp. €4.7 bn compared to 2020Q3.

The largest gains by value for General Government revenue in the first nine months of 2021 have been recorded in taxes:  In taxes on income, wealth, etc. (+17.1%, resp. €+5.8 bn) this is mainly due to corporation tax (+42.0%, resp. €+2.0 bn), wage tax (+6.4%, resp. €+1.4 bn) and income tax (+56.6%, resp. €+1.1 bn). In taxes on production and imports (+7.5%, resp. €+2.9 bn) the increase is mainly driven by value added tax (+7.6%, resp. €+1.6 bn) and mineral oil tax (+17.7%, resp. €+0.5 bn).

In 2021Q3, 45% of General Government expenditure applied to social transfers (monetary benefits and transfers in kind), 21% applied to compensation of employees and 14% to intermediate consumption. All other expenditure items stayed below 8% of total expenditure.

The largest increases by value for General Government expenditure in the first nine months of 2021 have been observed in intermediate consumption (+10.6%, resp. €+1.9 bn), this includes costs for Covid-tests and -vaccinations (costs of supplies). Also social benefits other than social transfers in kind (+3.3%, resp. €+1.9 bn) have increased. Since final data are not available for some Covid 19 measures, estimations have been applied, which will be adjusted to the latest level of knowledge in every publication.