EU fiscal policy clash as Germany blocks new debt and Austria’s Fiscal Council urges extra cuts

German Chancellor Friedrich Merz told EU leaders in Brussels that “new European debt cannot exist,” insisting the EU budget must be balanced and calling for a systematic reduction of European bureaucracy.

Austria’s Fiscal Council warned that the government’s planned savings are insufficient, estimating an additional €5.7 billion must be cut over the next two years to keep the 2028 budget deficit at the EU‑mandated 3 % limit. The Council projects deficits of 3.8 % of GDP in 2028 and a debt‑to‑GDP ratio reaching a historic 87.9 % by 2030, and urges further growth‑friendly consolidation measures across all public sectors.