Austria in the crisis: government must now implement radical reforms!

Austria in the crisis: government must now implement radical reforms!

Österreich, Österreich - Austria is in a deep economic crisis. According to current reports, the Austrian economy in 2023 in the third year in a row is in shrinking mode, and the forecasts are anything but optimistic. The WIFO expects a minus of 0.3 percent, while the IHS assumes a decline of 0.2 percent. Even the Austrian National Bank (OENB) provides for a minus of 0.1 percent for 2023. These worrying developments lead to falling tax revenue and increasing a savings requirement, which also exacerates the situation. The fiscal council chairman Christoph Badelt warns that the partial abolition of the cold progression could lead to significant loss of income. [The press] (https://www.diepresse.com/19516331/oesterreich-d-die-staerkste- Aller-Eurolaender) also reports that Austria is considered a maximum tax country with record income and at the same time a high budget deficit.

In the current situation, various political actors and economists demand reforms to cope with the challenges. FW General Secretary Reinhard Langthaler criticizes both the current and the previous federal government for the necessary reforms. It urges radical de -bureaucratization and tax relief for employees and employers. Langthaler's demand for lower energy prices for companies and consumers. "We have to take a reform course that gets the output side under control," says Langthaler. Despite persistent efforts, economic development in Austria looks bleak because the country does not make any progress in European comparison.

costs and loads increase

The current economic crisis also means that the unemployment rate will increase from 7 percent in the previous year to 7.5 percent. This entails additional burdens for the public sector, since the expenses for pensions, health and interest rates for government debt increase. For 2023, a budget deficit of 3.3 percent is predicted, which is a slight decline in 4.1 percent in the previous year. Larger austerity measures are being considered, including the abolition of the climate monus, which could bring savings of around 2 billion euros, as well as planned funding cuts and savings in ministries of EUR 1.1 billion from 2026.

Furthermore, the abolition of the educational leave for 2023 could achieve up to 350 million euros and even 650 million euros for savings for 2024. Austria could thus adapt to an upcoming deficit procedure, since the forecasts for 2026 also do not expect positive developments, whereby the uncertainty about possible further recession years is in the room. According to wko, the inflation rate for 2023 is also forecast at 2.1 percent for 2024, which reinforces the already tense location.

Future view and necessary reforms

The dark economic situation illustrates that serious reforms are essential to avoid a continuation of the recession. WiFo director Gabriel Felbermayr emphasizes how important it is to act now in order to promote growth in the coming years. Hopes rest on a slight upswing in 2024, with WiFo forecast growth of 1.2 percent and IHS of 1.1 percent. But everything depends on the international framework and political stability. This makes it clear that Austria's government concrete has to act in order to correct the negative trend reversal.