Too high debts – EU should recommend the shortage procedures of Austria

If the EU committee recommends a deficit procedure, the Council of Economic and Finance must agree. The reason for the expected shortage procedure is that last year Austria with its budget deficit of 4.7 percent of the gross domestic product (GDP) and the planned 4.5 percent this year is clearly above the permitted limit of three percent of the EU’s so -called Maastricht criteria.

The EU committee submits the spring package
The EU committee presents its spring package for the so-called European Semester on Wednesday. This also includes reports on household monitoring. This looks closely at compliance with the deficiency and debt criterion for endangered countries.

The basis for this is the requirements of the Stability and Growth Pact. In particular, Member States must comply with the deficit criterion and the debt criterion:

• The annual state deficit may not exceed 3 percent of GDP.
• The government debt is no more than 60 percent of GDP.

Minister of Finance must decide
If one of these two criteria is not met, the committee will check whether the deficit exceeds the government costs for investments. She also looks at the general economic and budget situation in the medium term. Based on this investigation, the Brussels authority decides whether she recommends the opening of a procedure for the EU economic minister and finance ministers. The final decision lies with them.

Van der Bellen sees “no reason to panic”
As part of the autumn package in November, the committee considers the opening of a procedure against Austria. The measures sent to Brussels in January from the negotiators of the FPö-OVP coalition could divert the procedure at the start of the year.

After the budget predictions became darker from month to month, it became clear that the procedure cannot be avoided. Since then, politicians and the committee have activated the consequences of a deficiency procedure: in addition to Marterbauer, federal president Alexander van der Bell recently emphasized that he “has no reason to panic”. In 2028, the federal government is planning to come from the EU deficiency procedure.

Would be the second shortage procedure for Austria
If a shortage procedure is started, Brussels and Vienna create a plan to reduce the debt. There are requirements for which level the shortage should be reduced in the current and the following year. The Commission does not forcceive Austria to take concrete measures, the country itself suggests this.

The procedure usually lasts four years. If the savings plans are not implemented, the worst case can take place in the worst case, but this has never happened before. It would be the second EU deficiency procedure for Austria: the first was opened after the financial and economic crisis of 2008.