Austria’s coalition might soon clash with Brussels and face EU punishment over public spending, according to Politico.
The European Commission plans to examine the country for excessive public spending between 2024 and 2026. To avoid punishment from the EU, Vienna must provide the Commission with a convincing plan to cut spending by 21 January, at a meeting of EU finance ministers known as ECOFIN.
The outcome depends on negotiations between the Freedom Party (FPÖ), led by potential chancellor Herbert Kickl, and the People’s Party (ÖVP). If the talks fail, Austria will miss an important deadline for submitting a spending cut plan. As a result, the country risks joining the ranks of debtors such as Italy and France.
Earlier in November, the Commission postponed the process to give Austria additional time to clean up its act. Vienna is expected to present a series of measures demonstrating that it can reduce the deficit below 3% of GDP over the coming years.
The FPÖ and ÖVP are rushing to agree on an economic plan by early next week. The former supported substantial tax cuts in their election manifesto. However, previous coalition talks collapsed due to sharp disagreements over balancing the budget.
The Social Democrats’ insistence on tax hikes prompted Austrian entrepreneurs and business associations to back the FPÖ-ÖVP coalition.
