Why has it been downgraded???
Mostly because the Austrian government finally (and wayyyyy too late) decided to solve the HYPO bank problem, for which they set up a bad bank to wind it down. The bad bank includes ca. 18 Bio. € of more or less toxic assets on the Balkans, that the bad bank will try to sell in the next 10-20 years.
But because the bad bank was set up, the 18 Bio. € in there must be added to the state debt. 18 Bio. € is roughly equivalent of 6% of the GDP.
Fitch estimates that this will increase Austrian debt to 89%, but it will be more like 86-87% at the end of this year.
If the bad bank assets are sold in the next years, debt as a percentage of GDP should go down again.
Similar bad banks have been set up in Germany too, but the German government was much faster in doing so, establishing them already right after the financial crisis hit.
Yikes. That's a good warning to the U.S. not to go on this "spending surge" that both the House GOP (military) and Dems (other sequester stuff) seem intent on going through with. We need to keep spending frozen.
The big debt increase here during the past 7 years has mostly to do with other stuff though, not really spending. See my answer above. Mostly bank restructuring payments, because our banks are heavily involved in Eastern and South Eastern Europe. After 2008, their economies went down and the banks got into trouble and now the taxpayers have to pay for cleaning up the mess (which was actually caused by FPÖ-figures in the early 2000s, when they agreed that the HYPO could heavily expand into the Balkans).
The other big chunck or reason why our debt has gone up significantly in recent years was the debt in state-owned companies such as the ÖBB (railway) and ASFINAG (road construction and repair). EUROSTAT has recently demanded that these debts must be included into the official state debt.
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Nonetheless, even though Fitch has downgraded Austria to AA+ it should be noted that since WW2 we have never had lower interest payments for our state debt.
I think the 10-year bonds are at only 0.38 right now, which is not much higher than Germany's 10-year bond yields.