Austria before EU criminal proceedings: record deficit on the test bench

Austria before EU criminal proceedings: record deficit on the test bench

Baden bei Wien, Österreich - The European Commission has announced that it will initiate criminal proceedings against Austria for excessive new debt. This is a direct consequence of the financial situation that the country is currently burdening. According to information from KA-News was the state deficit in the past year, which was the EU-upper limit of 3 Percent significantly exceeds. This high debt falls into a phase in which Austria has to deal with an economic crisis, high inflation and weak consumption demand.

It is particularly serious that the EU forecast determines that Austria will be the only member country in the current year. In order to counteract this development, the Austrian government plans a drastic reduction in government spending by 54 billion euros by 2029. The deficit procedure will not remain without consequences: Austria must take measures to reduce its debt and deficit to avoid possible punishments.

steps in the deficit procedure

The next step in the procedure consists of statements by the Economic and Finance Committee, such as . According to these statements, the Commission will confirm an excessive deficit and make recommendations for further deficit reduction. It is important to mention that such a procedure is not new to Austria. After the financial and economic crisis in 2008, a first EU deficit procedure against the country was opened.

The stability and growth pact (SWP), whose reforms have been decided in the EU, determines clear limits for government debt and deficits. The upper limit for new debt remains 3 percent of GDP and the debt is not over 60 percent of GDP. These rules that existed since 1997 have been adapted to the current economic conditions in recent years in order to be able to react better to economic undesirable developments. An effective monitoring has according to Tagesschau.de Especially during the corona crisis and the Ukraine war, which for the temporary suspension of many Deficit procedure led.

Although the Commission also has other countries such as France, Italy and Belgium, Austria is particularly affected in this exceptional situation. It remains to be seen how quickly and efficiently the government reacts to the new challenges. One thing is clear: the stability of the euro zone is at stake and another deficit process could significantly restrict Austria's financial flexibility during critical times.