Brussels initiates proceedings against Vienna due to financial shortfall
The European Commission announced this Wednesday the start of its first steps towards opening a financial deficit penalty procedure against Austria, after a significant breach of the allowed limit on the financial deficit was detected. A formal decision on this is expected to be made by the end of June, to be ratified later by the Council of Ministers of Economy and Finance of the European Union, which may convene on July 8 in Brussels.
This came as part of the spring package presented by the Commission annually within what is known as the 'European Semester', which includes precise assessments of the economic and financial policies of member states, in addition to oversight reports focusing on the commitment of countries to deficit and debt criteria.
Regarding Austria, the Commission found that the budget deficit exceeded the permissible limit, reaching 4.7% of GDP last year, and is expected to reach 4.5% this year, which is well above the maximum limit of 3% stipulated in the Maastricht criteria.
If this procedure is officially launched, Brussels and Vienna will have to prepare a joint plan to reduce the debt size, with a goal that the Austrian government aims to achieve by 2028 to exit this procedure.
Finance Minister Markus Marterbauer from the SPÖ party confirmed last week before the Federal Council that he "feels no fear" from these measures. It is worth noting that Austria is the only country in the European Union that the European Commission expects to experience an economic contraction this year.
Austria was not the only country facing this type of measures, as other countries such as Belgium, France, Hungary, Italy, Malta, Poland, Slovakia, and Romania are currently undergoing similar procedures.