Austria's Coalition Talks Continue into New Year

VIENNA (Reuters) – Austria's coalition talks are set to extend into the new year as three centrist parties are beginning to address the budget deficit, as highlighted by their leaders on Tuesday.

Chancellor Karl Nehammer's conservative People's Party (OVP), the Social Democrats (SPO), and the liberal Neos aim to establish Austria's first three-party government since 1949. However, they must navigate significant ideological divides on taxation, with the SPO pushing back against calls for spending cuts.

The pressure to finalize a deal is increasing, especially since the far-right Freedom Party secured the largest vote share in September's general election but could not form a government without a coalition partner.

Neos leader Beate Meinl-Reisinger remarked, "There will be no government under the Christmas tree, but there is a shared will and ambition to make progress this week," during a news conference with her counterparts. She noted the urgency, indicating they are pursuing savings of between 18 billion euros to 24 billion euros ($19 billion-$25 billion).

Austria's economic difficulties, driven by poor growth in trading partners like Germany and declining consumer confidence, have further complicated the situation, leading to predictions of a budget deficit of 3.7% of GDP this year, surpassing the EU's 3% limit, and potentially increasing to 4% or more next year.

Nehammer emphasized the continued discussions over the Christmas holidays, stating it would help gauge their progress.

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