Long-term Perspectives of Public Finances in Austria

Current and ongoing demographic changes, in particular the increase in the elderly population, have a significant impact on public finances. This study examines the impact of demographic change on Austrian public spending on pensions, health care, education, long-term care, and families, taking into account the current legal framework. The transition of baby boomers from employment to retirement age, as well as the rise in life expectancy and the associated increased use of health and long-term care services, result in an increase in (public) social spending. In addition, as a result of the COVID-19 induced business cycle crash and expansionary fiscal policy, government debt is significantly higher than the starting value of the last long-term projection. Against this background, government debt is very likely to expand more rapidly than nominal economic output again in a few years' time.