Austria Fears New Normal of Stimulus, Urges EU to Cut Deficits

(Bloomberg) -- Austria’s government is stepping up its efforts to urge fellow European Union nations to quicken a return to cautious budget policies, as the latest wave of the pandemic will require less stimulus.

Finance Minister Gernot Bluemel said further measures to support economies were unlikely despite an increase in infections, as higher vaccination rates allowed governments to avoid lockdown measures.

Instead, EU member states should look ahead and start rebuilding state financial coffers to prepare for future crises. They should step back and allow market mechanisms take back their role as the drivers of investment and expansion.

“It’s a misunderstanding that with taxpayers money we have to ensure growth forever,” Bluemel said at a panel at the Alpbach Forum in Austria. “I fear that some of the ideas from the coronavirus crisis may become the new normal.”

Austria’s government wants to stem a wave of economic policy that banks on low interest rates and expands the role of budget stimulus. The bloc has been debating rules that govern the level of state debt in member states, with earlier benchmarks of 60% of economic output surpassed in most nations.

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