Welcome to the new Independent website. We hope you enjoy it and we value your feedback. Please contact us here.

Austria budget deficit unites parties


Central Europe Correspondent

After a row lasting more than six months - and one election later - Austria's two main parties kissed and made up yesterday with the announcement that, for the fourth time in succession, they would renew their left-right coalition government.

A relieved Franz Vranitzky, who remains chancellor, hailed the agreement between his Social Democrats (SPO) and the conservative People's Party (OVP) as a triumph for common sense and compromise. Wolfgang Schussel, the OVP leader and deputy chancellor, described it as "good news for Austria".

At the centre of the new agreement is a tough package of austerity measures designed to cut 100 billion schillings (pounds 6.5bn) from the country's spiralling budget deficit over the next two years.

In a bid to show they mean business, the coalition partners said they planned to cut two ministerial posts and reduce the number of state secretaries.

It was disagreement over how to reduce the budget deficit that caused the break-up last autumn of the last SPO-OVP coalition after less than one year in office. Although the SPO emerged strengthened from the December election that followed, the new cost-cutting economic policy bears the firm imprint of the OVP, which even flirted with the idea of throwing in its lot with Jorg Haider's extreme-right Freedom Party to ensure it got its way.

As part of the austerity package, designed to bring Austria into line with the Maastricht criteria for joining the single European currency, 10,000 civil service posts are to be axed by the end of next year, generous maternity leave payments are to be slashed and students up to the age of 27 will no longer be able to travel for free on public transport.

In a country that has got used to an astonishing degree of welfare cushioning, the prospect of the cuts has already provoked protests from trade unions, pensioners and students, thousands of whom this week teamed up with their university professors in declaring an indefinite strike.

Many Austrians, however, have recognised that, with the opening of the Iron Curtain in 1989 and entry into the European Union last year, the days of jobs for life and early retirement were destined to come to an end. "We have no option but blood, sweat and tears," said Anneliese Rohrer, political editor of the daily Die Presse.