Austria threatens EU deficit proceedings: Experts warn of saving savings!

Austria threatens EU deficit proceedings: Experts warn of saving savings!

Österreich, Land - The EU deficit procedure for Austria is within reach due to an increased need for consolidation. This is the main topic of a current press conference on which Philipp Heimberger from the Wiiw commented. According to Heimberger, the procedure will probably be initiated in May after Austria presented its budget plans. It should be noted here that a deficit procedure would hardly have any negative effects on the financing costs, which experts considered exaggerated. Instead, the attempt to avert the introduction through massive savings could bring more problems than such a measure itself.

The next meeting of the EU Council for Economic Affairs and Finance (Ecofin) takes place on May 13th, and a decision about the procedure is then expected. Heimberger pointed out that an inadequate adjustment of the budget plans could lead to the European Commission proposed a procedure for excessive deficit. If Austria does not comply with the minimum consolidation of 0.5 percent of GDP annually, this situation could worsen. In this context, 3.9 billion euros are necessary, while planned savings of 8.7 billion euros would be sufficient in the coming year to avoid a procedure.

effects of the deficit procedure

A deficit procedure goes hand in hand with increased reporting obligations. Austria would have to send a report to the European Commission every six months. This would not be the first measure of this kind, since 11 EU member states currently have deficits over 3 % of GDP. In addition, political tensions within the EU could increase because affected states criticize interference in their budget autonomy.

The procedure is part of the stability and growth pact, which has been designed in the EU since 1997 to ensure financial stability. This pact provides for several stages: First, Member States receive a warning when exceeding the deficit limit. This is followed by a detailed correction plan and ultimately, with further non -compliance, possible sanctions such as fines.

criticism of the deficit procedure

The procedure is often criticized. Critics complain that it is too rigid and inflexible in times of crisis and that the national sovereignty of the Member States is restricted. In terms of social effects, it is also feared that savings on social programs and public services could have negative effects on citizens. According to experts, a handling of the procedure that is too rigid can also endanger economic growth and lead to job losses.

The reform of the stability and growth pact, which comes into force on April 30, 2024, aims to ensure budget discipline and stable public finances. Germany actively participated in this and ensured that the upper limits for debts and deficits that were set in the Maastricht contract continue to enjoy high priority.

Overall, it remains to be seen how the Austrian government will shape its budget plans in order to prevent possible consequences of a deficit procedure.

For more information on the risks and the context of the EU deficit procedure, the relevant reports can be supplemented. So explains OE24 href = "https://www.pageorama.com/?p=eUdefizitverfahrfahrfahrfahrfehen_eS_WAS_WAS_SIND_DIE SOLGEN"> Pageorama summarizes the functioning of the procedure and its possible effects. On the background of the reforms in the stability and growth pact, the explanations provide information on Federal Finance Ministry .