Austria and the Netherlands in EU crosshairs over accounts, austerity hits austerity hawks

Brussels – Attention to public spending, budget consolidation, debt reduction and reforms, a policy menu as clear as it is easy to summarize in one word: austerity. Austria and the Netherlands, two countries that have been the
ringleaders of this budgetary approach for years, are now witnessing its
implementation: Strange but true, the protagonists of austerity have deficit and debt situations too out of control not to prompt the European Commission’s intervention. Result: Request for correction of Amsterdam’s recovery plan and request to initiate an excessive deficit procedure for Vienna.

Historical courses and recourses: The very people who demanded strict rules and compliance are now being called out abroad. As part of the European semester, the economic policy coordination cycle, the EU executive finds that the Netherlands’ deficit and debt repayment plan exceeds the net expenditure ceilings in both annual and cumulative terms, and appropriate corrections are called for. A major blow to the far-right government.

No discount for Austria either. The country’s deficit-to-GDP ratio will remain above the 3 per cent threshold, for a deviation considered “neither temporary nor close to the threshold,” which is why the Commission is asking the Council to initiate the excessive deficit procedure. The request is expected to be on the table at the January Ecofin Council, with the government in Vienna forced into a race against time. Austria is among those five member countries that have not yet submitted a recovery plan for imbalances (the others are Belgium, Bulgaria, Germany and Lithuania). There is time to convince the Commission and the Council not to proceed. In the meantime, however, the two countries that symbolize the hard line on public accounts end up being the subject of their own recipes.

“It is true that there are some rigid rules, and honestly I am not the one who wanted that“, pointed out the Commissioner for the Economy, Paolo Gentiloni. “If the are strict rules, in some cases these rules were asked by someone. Now we have these rules and the Commission is asked to implement them”, he added during the press conference held in Strasbourg.

Gentiloni’s remarks confirmed on the one hand that the European Commission, as guardian of the treaties, must enforce the common rules, while on the other hand highlighted once again the boomerang effect of austerity for those who asked for it.