Start negotiations on a new stability pact - what awaits us?

Start negotiations on a new stability pact - what awaits us?

Europa, Österreich - Negotiations on a new stability pact have started at the civil servant level. However, the political discussions are only expected at a later date, as reported "https://www.kleinezeitung.at/service/newsticker/innenspolitik/19724298/neuer-stabitaetspakt-werd-zistrated"> Kleine Zeitung . A conclusion of the talks is realistic in September at the earliest.

At the upcoming Governor's Conference, the topic of stability pact is treated as a border issue. In this context, the countries and communities urge better conditions. The Ministry of Finance emphasizes the need to renovate the state budget, in particular by a double budget.

Current deficit forecasts and new fiscal rules

The last stability pact came into force in 2012. According to the current requirements, the total -state structural deficit must not exceed 0.45 % of GDP. For the countries and municipalities, the upper limit is a maximum of 0.1 % of the GDP, while the federal government has set a limit of 0.35 % of GDP. The deficit forecasts show a total of 4.5 %, 4.7 % and 4.2 % for the years 2023, 2024 and 2025.

This year's budget provides for a deficit of 3.5 % for the federal government. For the countries and municipalities, 1 % are planned in 2023 and 0.7 % in 2026. It should be noted that the stability pact does not provide specific measures to achieve the permitted deficits.

The EU introduced new fiscal rules last year, which must be implemented quickly by the Member States. These new guidelines require national plans to reduce debt until the end of the year.

EU budget and political processes

In the context of these developments, the Council of the EU is active to develop its position based on the commission's proposals, so Europa.eu . The Council names factors that require a political direction and prioritism by the EU heads of state and government.

On this basis, the EU heads and government heads in the European Council can create their draft for the conclusions for the budget package. The most important points in the budget require a clear political direction, which the council then formulates. After the determination of all points of view, the dialogue between the European Parliament and the Council begins to reach an agreement.

Negotiations on the stability pact and the associated fiscal challenges will be decisive for economic stability in the EU in the coming months.