Brussels rebukes Romania and Austria for breaching EU spending rules

BRUSSELS — The European Commission has reprimanded Austria and Romania for breaking European Union limits on government spending — as Austria deals with the financial fall-out of months of political deadlock and Romania's long-running fiscal problems drag on.

Under EU fiscal rules, a country's deficit — the difference between a government’s revenues and expenditures — cannot exceed 3 percent of the country's gross domestic product.

Both countries went through a long period of political crisis this year. But their situations are very different.

The last time Austria was under strengthened fiscal surveillance by the Commission was more than 10 years ago. Romania has been there since 2021 and has repeatedly failed to comply with fiscal targets agreed with Brussels.

The increase in Romania's net expenditure, the figure that matters most under EU fiscal rules, was almost 20 percent in 2024, 5.4 percent in 2025, and likely to reach over 8 percent in 2026, according to the EU’s forecasts.

As part of its Spring Package announcement on Wednesday, the Commission said Romania had not taken action to rein in its public finances, which allows the EU executive to potentially propose suspending EU cohesion and post-pandemic funds for Romania.

That wouldn't happen until fall at the earliest. However, the EU executive is recommending Romania urgently implement spending cuts, ideally before a meeting of finance ministers due on July 8, an EU official said.

The Commission also proposed putting Austria into strengthened fiscal surveillance. Vienna's deficit was 4.7 percent of GDP in 2024 and it is projected to be above 4 per cent of GDP in 2025 and 2026. A new coalition government between center-right and center-left parties entered office in March after previous attempts to form an executive including the far-right failed.

Governments are set to take a formal decision on Austria in July.