Despite Country Deficits: EU Sees Austria on Track in Deficit Procedure

Austria is likely to be certified by the EU Commission as being on track in the ongoing deficit procedure, despite expected higher budget deficits of the federal states. The EU Commission plans to present the autumn part of its so-called European Semester Package with economic policy recommendations to the EU countries on Tuesday in Strasbourg. According to information from the Commission, Austria is "on line," although the budget gap is expected to remain deep.

Autumn Package Without New Requirements for Austria

Vienna reported the measures to combat the deficit to Brussels on time by October 15. On Tuesday, the Commission is unlikely to present a new, independent assessment of Austria, as it has already submitted the desired plans and figures for 2025 and 2026 with the double budget. No further requirements from Brussels are expected until the publication of the spring package in May or June 2026, despite the "surprise" from the figures of the federal states, according to the EU Commission.

It has been known for several weeks that the deficits, especially in eastern federal states like Vienna, are significantly exceeding the framework. As a result, the national deficit could rise towards 4.9 instead of the targeted 4.5 percent of GDP. Finance Minister Markus Marterbauer (SPÖ) stated towards the federal states and municipalities that they must "make significantly more effort." The Stability Pact, which regulates the borrowing possibilities of the territorial authorities, must be submitted to the EU by the end of the year and is currently being negotiated.

EU Economic Forecast Also Expects High Deficit Values

The latest EU autumn economic forecast also expects poor values: The deficit is expected to exceed the EU-defined permissible value of 3.0 percent significantly this year, at 4.4 percent of economic output. Next year, the deficit is expected to slightly decrease to 4.1 percent, but rise again to 4.3 percent the year after (EU average this year: 3.3 percent). However, Austria is not alone with the poor deficit values: In addition to Germany, Belgium, Estonia, France, Slovakia, Finland, Hungary, Poland, and Romania will not meet the 3-percent Maastricht limit in 2026.

Exit from the Procedure by 2028 as a Goal

The reason for the opening of the deficit procedure was that Austria, with its budget deficit of 4.7 percent of GDP last year and the planned 4.5 percent this year, is clearly above the allowed limit of three percent of economic output according to the Maastricht criteria of the EU. In early June, the EU Commission found an excessive deficit in its spring package for the European Semester for Austria and announced the recommendation of a procedure, which was approved by the Council of Finance Ministers in July. The plan is for Austria to exit the deficit procedure by the end of 2028.

(APA/Red)

This article has been automatically translated, read the original article here.