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Brussels – A major topic at the meeting of EU economic and finance ministers on Tuesday in Brussels was the plans to exempt higher defense spending from EU debt rules. Furthermore, the new plans of the EU Commission to promote competitiveness and budget plans were discussed. The Austrian budget deficit was not on the agenda on Tuesday, as Finance Minister Gunter Mayr emphasized before the meeting.
The political situation in Austria has changed, Mayr told journalists. “Despite everything, I will continue to make a strong effort to ensure that no deficit procedure is imposed on Austria.” The plan presented at the start of the coalition talks between FPÖ and ÖVP in Brussels to avoid an EU deficit procedure includes 6.39 billion euros. The EU Commission is “primarily concerned with volume and expenditure-side consolidation.” Regarding further details, Brussels is “open”, meaning individual measures could also be replaced.
The goal must be that the Austrian deficit falls below the 3-percent mark of economic output demanded by the Maastricht criteria by 2025. Vienna has until the end of April to submit the budget plans to Brussels. However, there is a “certain time pressure, as some measures in the package would have to come into effect by April 1.” He assured the Commission, “that we will keep them updated and ensure that the plans can be adhered to.” The National Council session next week is essential, emphasized the Finance Minister.
EU Commission is working on proposals for more flexibility in defense spending
A major topic was also the economic and financial impact of the Russian war of aggression against Ukraine. EU Commissioner for Economy and Productivity Valdis Dombrovskis emphasized before the meeting that it is “clear that the EU must enhance its response.” This was also the subject of the meeting of several European heads of state and government in Paris on Monday. He emphasized the need for a “strengthening of EU defense spending and capacities as well as the necessary support for Ukraine.” The European Commission is currently working on “how we can create more flexibility for defense spending within the EU debt rules.”
EU Commission President Ursula von der Leyen had announced at the Munich Security Conference that higher defense spending would be enabled by activating the escape clause to European debt rules. The national escape clause can be activated in extraordinary circumstances beyond the control of the member states that have significant impacts on public finances. The general clause, on the other hand, was activated, for example, during the coronavirus pandemic to prevent an economic downturn.
Dombrovskis emphasized that it must happen quickly regarding spending at the member state level to achieve additional flexibility. His authority will “work on the modalities in the coming weeks.” He also wants to examine which possibilities the current multi-annual EU budget offers, and what possibilities exist for additional defense financing at the EU level. Mayr commented on the plans, “we will look at the specific proposals when they arise.” The assessment will then take place within the framework of the new government.
500 billion more for defense
According to the EU Commission, the EU must spend around 500 billion euros more on defense in the next ten years. To raise these funds, some options are mentioned, such as an EU defense fund, “Euro-bonds”, unused funds from the cohesion pots, or more loans from the European Investment Bank (EIB).
The finance ministers also discussed the EU Commission’s “competitiveness compass”, which is intended to make Europe more competitive. To achieve this, it wants to soften and reduce countless laws and regulations. (20.02.2025)