By: Vida Kocjan
Slovenia has found itself at a crossroads. Although the ruling coalition of the Freedom Movement, SD, Levica claims that “everything is under control,” the data tells a different story.
Warnings from the Fiscal Council are becoming increasingly alarming: public spending is rising, and in the first five months of the year, expenditures exceeded revenues by €550 million — that was the deficit. There are no reforms, and the long-term sustainability of public finances is seriously at risk. It is becoming more evident that the current measures are not designed with the future in mind but merely to extinguish political fires and serve self political interests.
Slovenia’s gross domestic product (GDP) shrank by 0.8% in the first quarter of 2025, the worst result among European countries, most of which recorded growth. Revenue dynamics are slowing, directly tied to reduced economic activity. At the same time, expenditures are increasing, mainly due to higher labour costs linked to the new public wage system, while investment spending lags behind — in part due to extremely poor absorption of EU funds. Recovery from the floods is also delayed, with only around 10% of the planned funds disbursed in the first five months of 2025.
It is also worrying that the government insists on increasing the tax burden. Starting July 1st, a new tax for long-term care will be introduced – although such services will not be available yet, the government will begin collecting funds “in advance.” In other words, to cover its own excessive spending.
The tax squeeze is tightening. Businesses warn that entrepreneurial drive is being stifled, with companies considering relocating to more predictable environments due to bureaucratic and tax pressures. And some are already doing just that – quietly, but with real consequences for the domestic labour market and economic development. Job opportunities are shrinking. Meanwhile, the government sleeps – and seems content.