Alarm Signal from Brussels: Austria's State Budget in the EU's Sights – Are Harsh Austerity Measures Coming Now?
Are we living beyond our means?
In short: According to the EU rules, the so-called fiscal rules, a country's annual budget deficit should be a maximum of 3 percent of the gross domestic product (GDP). National debt should ideally be below 60 percent of GDP. Austria has exceeded the deficit limit in recent years. Sure, the Corona crisis and energy crisis have been costly, so the rules were relaxed. But now the EU is taking a very close look again.
What the hell is a deficit procedure?
No need to panic – at least not immediately. A deficit procedure is not a ticket that you pay right away. It is more of a multi-step process. The Commission makes proposals and gives recommendations on how the country should get its deficit under control again. Austria then has to explain how it intends to achieve this. Brussels monitors this very closely. If a country refuses or does not meet the targets, penalties CAN theoretically follow, but that is the last step and rarely happens.
Is Brussels dictating our budget now?
No, Brussels does not dictate every detail of how much is spent on schools, health, or roads. But the EU Commission now sets clear guidelines for the austerity course. It expects a credible plan on how the deficit will be structurally reduced. This, of course, significantly limits the scope for the Austrian government in future budget negotiations. Savings must be made, period. The only question is where.
And what happens next?
Austria must now enter into a dialogue with Brussels and present measures on how the deficit is to be reduced. This will definitely be a challenge for the next government. It means that unpopular decisions may have to be made to cut spending or increase revenue. The golden times of easy money could be over for now.
The looming deficit procedure is therefore more than just a technical act from Brussels. It is a clear signal: Austria must get its finances in order. How and where savings will be made will be one of the big questions in the coming months. It remains exciting!
This article has been automatically translated, read the original article here.