EU Recommends Austria Increase Defense Spending
The first recommendation for Austria is to increase defense spending. A derogation clause was approved for 15 EU states, allowing for more defense spending. Brussels sees problems with the ongoing domestic dependence on fossil fuels and the pension system.
An "increase in overall defense and readiness spending in line with the conclusions of the EU summit on March 6, 2025" was demanded by the Commission in the report as part of the so-called "European Semester" at the beginning of June. The Commission emphasized that it had recommended the activation of the national derogation clause to support a rapid and significant increase in defense spending. 16 EU states have applied for the derogation clause so that a certain proportion of higher defense spending can be excluded from the calculation of the budget deficit.
For 15 states, the Council approved the activation of the clause today. The clause is valid for a period of four years and provides a margin of up to 1.5 percent of GDP. The affected member states are Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Estonia, Finland, Greece, Hungary, Latvia, Lithuania, Poland, Portugal, Slovakia, and Slovenia. Germany's application can only be examined once the country has completed its fiscal structure plan, according to the Council. Berlin had received a deferral due to government formation, as was also the case with the Austrian fiscal plan.
Brussels Urges More and Better Childcare Facilities
Vienna must further improve the financial sustainability of the healthcare and pension systems, for example, by significantly raising the actual retirement age. The Brussels authority repeatedly called on Austria to create more incentives to increase full-time employment of women, including through better and more childcare facilities. Entrepreneurial dynamism also needs a boost through targeted support for startups and scale-ups. The Commission noted progress in Austria's energy transition. However, it criticized that our country still relies on imports to cover two-thirds of its energy needs, particularly oil and gas.
In the annual cycle, the EU Commission reviews the economic, budgetary, and social policies of governments and provides targeted advice for corrections. These are then approved by the Council. This so-called European Semester is intended to help coordinate the policies of EU states. Excessive budget deficits and mountains of debt, as well as reform backlogs, should be avoided. The overarching goal is to adhere to the Maastricht limits of a maximum of three percent budget deficit and 60 percent total debt.
(APA/Red)
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