Austria's Coalition: Bridging Divides Amid Budget Woes

Austria's coalition talks among the People's Party, Social Democrats, and Neos are set to continue into the new year. The discussions focus on economic strategies to curb the budget deficit amidst ideological differences and shrinking economic output. Pressure mounts as Austria's budget deficit is predicted to exceed EU limits.

Austria's coalition talks, involving the People's Party, Social Democrats, and Neos, will carry on into the new year as the parties tackle the budget deficit issue, leaders said on Tuesday. This potential coalition marks Austria's first three-party government since 1949, with disagreements persisting on taxation and spending cuts.

The coalition negotiations come amid mounting pressure. The far-right Freedom Party secured the most significant vote share in the September election but was sidelined from forming a government due to the lack of a willing coalition partner. "There is no government gift-wrapped under the Christmas tree, but progress is on the horizon," said Neos leader Beate Meinl-Reisinger, highlighting the urgency to find savings between 18 and 24 billion euros.

Astrumming economic factors pose additional challenges. Austria's economic output dwindles due to sluggish growth in trading partners and waning consumer confidence. Economic analysts, including Wifo and the Austrian National Bank, forecast the deficit could hit 3.7% of GDP this year, violating EU rules. As talks progress "intensively over the holidays," Chancellor Nehammer remains hopeful about reaching a successful resolution.

(With inputs from agencies.)