After being loosened in 2016 with the income tax reduction, budget policy will likely be put back on the path towards an equivalent deficit of 0.5% by 2020. The positive effect on receipts made by the increase in capital gains tax should outweigh the additional financial burden of integrating refugees. The sale of assets purchased from struggling financial institutions by public "bad banks" should result in reduced debt. From 2017, the country's European commitments will oblige it to make annual savings equivalent to 1.25% of GDP in order to bring its debt back down to the 60% threshold over a period of twenty years. Savings in the areas of retirement and health insurance (gradual rise in the effective retirement age, tightening of disability pensions criteria) will be limited. The commitment of the Länder and numerous (small) municipalities (1/3 of public spending) might be disappointing given that they derive most of their resources from federal taxation. However, subsidies, in particular in transport, which amount to 4% of GDP, are a potential source of savings. Consolidation is conditional on the assumption that the bank rescue episode, which accounts for one quarter of debt, ended with the restructuring in October 2016 of the debt of HETA, the public structure that took on the commitments of Hypo Alpe Adrian after its bankruptcy. The situation of Austrian banks, whose assets in central and Eastern Europe amount to 57% of GDP, has much improved. Against the backdrop of an economic upturn, their activity in central and eastern Europe is again profitable overall, especially in the Czech Republic, Romania and Slovakia, where they have major presences and where local deposits now exceed their outstanding credit.
Budgetary consolidation is the main area of agreement between the social democrats of the SPÖ and the conservatives of the ÖVP in the grand coalition that has been in power since 2013. However, the parties do not agree on how to go about it: the former favor tax rises while the latter prefer spending reductions. In this context, it is by no means certain that the government will make it to the scheduled end of its term in 2018. Chancellor Kern (SPÖ) or the conservatives may ask the President to hold early elections. The population seems weary of the shared domination of the two traditional main parties, and a November 2016 opinion poll put the far-right FPÖ Freedom Party in front, ahead of the SPÖ and, in a distant third, the ÖVP. However, Alexander Van der Bellen, who is close to the greens, prevailed in the second round of the presidential elections in December 2016.