To avoid being placed under the European Union’s special regime for over-spenders, Vienna must now present a credible plan to cut spending to the Commission by Jan. 21.
Its chances of meeting the deadline will depend on whether talks between the far-right Freedom Party (FPÖ), whose leader Herbert Kickl is the favorite to become chancellor, and the conservative People’s Party (ÖVP) deliver a rapid agreement.
A further collapse in the talks would see Austria miss a crucial EU deadline to submit the spending reduction plan — and, embarrassingly, end up in the same basket as highly indebted Italy and France.
Herbert Kickl called for a “massive political fire brigade operation” to bring the current “debt conflagration that threatens to consume everything under control.” | Helmut Fohringer/APA/AFP via Getty Images
While the size of Austria’s budget deficit would normally warrant the punishment the EU metes out to overspending countries, the Commission delayed the process in November to give Vienna extra time to get its house in order.
As part of the deal, Austria is expected to present a raft of measures showing it can slash its public spending deficit to below 3 percent of GDP over the coming years by the next EU finance ministers’ meeting, known as ECOFIN, on Jan. 21.
But time is running short. A Commission spokesperson told POLITICO that to meet the requirements, the package “should be credibly announced and sufficiently specified well ahead of the January ECOFIN.”