Austria misses EU’s structural deficit target

Austrian Chancellor Christian Kern gives a statement at the end of the second day of the European spring summit in Brussels, Belgium, 10 March 2017. [Stephanie LeCocq/ EPA]

Austria’s structural deficit last year was slightly larger than the government had forecast, overstepping the limit of roughly 0.5% of gross domestic product (GDP) sought under European Union rules.

A Finance Ministry paper showed today (19 April) it came in at 0.67%.

Eurozone countries are obliged to bring their structural budgets – the budget adjusted for fluctuations in the economic cycle – close to balance or into surplus.

Structural surpluses and deficits strip out items such as the cost of extraordinary events considered outside a state’s control, so they are viewed by EU officials as a yardstick of healthy public finances.

“Taking into account extraordinary costs for refugees and the fight against terrorism, the 2016 structural deficit amounts to 0.67% of GDP,” the Finance Ministry update on Austria’s public finances posted online said, referring to items that it believes can be stripped out of the total.

Brussels tells Italy to reduce fiscal gap or risk being fined

The European Commission warned Italy on Wednesday (22 February) it risked disciplinary action if it did not adopt promised measures to cut its deficit, adding to pressure on a government facing possible early elections and rising euro-sceptic sentiment.

Austria is one of the EU countries that has taken in the most asylum seekers in the continent’s migration crisis, relative to its population of 8.8 million. It has relied on an exemption that applies to those member states to keep its structural deficit within bounds.

The centrist coalition government’s budgets had provided for a structural deficit of 0.5% last year and in 2017. The update published on Wednesday said the structural deficit was still on track to meet that target this year.

The regular budget deficit for 2016 was well within the EU’s limit of 3% of GDP at 1.55% and would shrink to 1.0% next year, less than the 1.2% forecast in October’s budget announcement, Wednesday’s update added.

Portuguese finances continue to impress

The Portuguese government rolled out an ambitious plan yesterday (13 April) to eliminate its budget deficit by 2020 after slashing the gap to its lowest level in at least four decades last year, while also sharply reducing public debt and spurring growth.

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