Excessive deficit procedure

EU Commission continues to grant Austria a grace period

(Bild: APA/HANS KLAUS TECHT)

The plan put forward by the FPÖ and ÖVP in Brussels at the beginning of the coalition talks to avoid an EU excessive deficit procedure is still likely to apply: The European Commission is following the latest developments in Austria and is in contact with the Austrian authorities, a spokesperson explained in Brussels on Thursday.

The Commission is still planning to "reassess the situation as part of the spring package of the European Semester".

This is expected in April. The Commission had already stated in January that it would then reassess Austria's budget situation. This will be based on the budget outturn for 2024 and the measures presented by the Austrian authorities in the draft budget and the medium-term fiscal and structural plan. These should be submitted to the Commission by the end of April.

No excessive deficit procedure initiated so far
The European Union declared in January that it would not initiate an excessive deficit procedure against Austria after all. The responsible EU Commissioner Valdis Dombrovskis informed Finance Minister Gunter Mayr of this in a letter. The measures presented by the blue-black coalition negotiators could be sufficient to bring the deficit below the Maastricht limit of three percent of GDP, according to the letter. Specifically, around 6.3 billion is to be saved in 2025. This should enable the budget deficit to reach the 3% limit (of economic output) required by the EU Commission.

The question of whether a deficit procedure should be avoided at all previously divided the ÖVP, SPÖ and NEOS. The Reds would have been in favor of adopting such a procedure. Some experts, including Wifo head Gabriel Felbermayr and IHS director Holger Bonin, had also spoken out in favor of a procedure instead of a radical austerity course. An excessive deficit procedure generally offers more flexibility in the event of exceptional economic or financial crises.