Due to the economic consequences of the corona pandemic, the EU Commission will also suspend the deficit and debt rules for EU members in the coming year. On the basis of the latest economic forecast, it was decided to apply a corresponding exemption also in 2022, the commission announced on Wednesday. The deficit and debt rules would then likely be reintroduced from 2023. Austria currently does not comply with either of these.
The so-called general escape clause was activated for the first time in view of the coronavirus crisis in March of the previous year. This means that the EU states do not officially have to comply with the regulations - no more than 60 percent debt ratio and no more than 3 percent budget deficit based on economic output - and can take on more debt to help their economy.
"We encourage the member states to continue to pursue a supportive fiscal policy this year and next," said Vice-Commissioner Valdis Dombrovskis. The aim is to maintain public investment in order to stimulate growth. For highly indebted countries in particular, however, “a healthy mix of spending” is necessary that focuses on investments and “keeps other expenditures under control”.
Austria and other countries do not meet the requirements
"We are coming to a crucial point for our economy," said Dombrovskis. “The prospects are more favorable than we predicted a few months ago.” The upswing is just around the corner. However, economic aid should not be scaled back too early. "Fiscal policy should remain supportive in both 2021 and 2022," said Dombrovskis.
The Corona development fund with 672,5 billion euros in the form of grants and loans will help. By the end of next year it will provide an economic impetus amounting to 1,2 percent of the gross domestic product and help create 800.000 new jobs. The EU states should make good use of these funds, especially since they would not be counted towards national debt.
In addition to Austria, 22 other EU states currently do not meet the deficit regulation, according to the EU Commission. A total of 13 EU countries violate the national debt criterion.
If the deficit violations persist, the member states face sanctions from Brussels. Fines of up to 0,2 percent of economic output are possible, which can add up to billions of euros. Structural funds could also be cut. However, the process is lengthy and the EU has never imposed any fines. (apa / afp)