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: Public raised to record high in 2020Q4

Whereas in the last quarter of the previous year a public surplus was reached, in 2020Q4 a public deficit of €14.9 bn was observed which accounts for 15.1% of the quarterly Gross Domestic Product (GDP). Compared to the last quarter of 2019 (2019Q4: public surplus of €0.3 bn resp. 0.3% of quarterly GDP), this is an decline of €15.2 bn resp. 15.4% of quarterly GDP.

Though General Government revenue decreased by 4.6% resp. €2.5 bn (2020Q4: €50.8 bn, 2019Q4: 53.3 bn) compared to 2019Q4, General Government expenditure increased by 24.0% resp. €12.7 bn (2020Q4: €65.7 bn, 2019Q4: €53.0 bn). Within the same period, the quarterly GDP increased by 4.8% resp. €4.9 bn (2020Q4: €98.7 bn, 2019Q4: €103.7 bn).

The detailed figures of these results are compiled by short term public finance statistics in Statistics Austria and have been released on April 1, 2021. The results for 2020Q4 are based on preliminary accounting results of central, regional and local governments as well as social security funds. Other units of General Government have been estimated based on available information and preliminary results.

Over 88% of General Government revenue in 2020Q4 result from taxes and social contributions, they added up to €44.8 bn. This figure decreased by 4.3%, resp. €2.0 bn compared to 2019Q4.

The largest decreases in value for General Government revenue in the last quarter of 2020 were primarily to be seen in current taxes on income, wealth, etc. (-10.4%, resp. €-1.7 bn) and in taxes on production and imports (-3.5%, resp. €-0.5 bn). On single tax level, the largest losses have been observed for the corporation tax (-24.7%, resp. €-0.8 bn), the wage tax (-7.3%, resp. €-0.6 bn) and the value added tax (-5.3%, resp. €-0.4 bn).

In 2020Q4, about 39% of General Government expenditure applied to social transfers (monetary benefits and transfers in kind), 18% applied to compensation of employees, 13% to subsides and 12% to intermediate consumption, all other expenditure items stayed below 8% of total expenditure.

The increase of General Government expenditure in the last quarter of 2020 is mostly due to a raise of subsidies (364.1%, resp. €6.8 bn), this includes payments for furlough schemes and other subsidies like "Fixkostenzuschuss" or “Umsatzersatz”. Also social benefits other than social transfers in kind (8.9%, resp. €1.7 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.