Economy in crisis

Chancellor presents four-point plan for growth

Nehammer wants lower taxes and more growth.

(Bild: APA/Georg Hochmuth)

In view of the weakening economy, Federal Chancellor Karl Nehammer (ÖVP) hosted an economic summit at the Federal Chancellery on Wednesday. The "growth plan" includes, among other things, a reduction in bureaucracy, tax cuts and reductions in non-wage labor costs.

Following consultations with the President of the Chamber of Commerce, Harald Mahrer, and the President of the Federation of Austrian Industries, Georg Knill, Nehammer spoke of a "close alliance between politics, business and industry". 

The state had "helped a great deal in times of crisis", said Nehammer at a joint press conference with Mahrer and Knill. Now, however, it was time for it to withdraw again "carefully, cautiously but constantly" and to put "free economic growth back at the center", continued the Chancellor.

Four-point plan drawn up
The jointly developed "Growth Plan for Austria" comprises four points:

1. More qualified workers.
2. The reduction of bureaucracy.
3. A reform of the tax and duty system.
4. A clear "no" to the inheritance and wealth tax demanded by the SPÖ in particular.

Specifically, as part of the tax reform, taxes on overtime should be abolished and non-wage labor costs reduced. The latter is "probably the most important measure to strengthen competitiveness", emphasized Knill.

From left to right: IV President Georg Knill, Federal Chancellor Karl Nehammer (ÖVP) and WKÖ President Harald Mahrer

(Bild: APA/GEORG HOCHMUTH)

Furthermore, according to the growth plan, full-time work must be made more attractive and working in retirement must be made easier. According to Knill, the welfare state should "by no means" be shaken, it is about "making work easier".

Making it easier to enter the labor market
Mahrer particularly advocated the simplification of work permits for third-country nationals, the so-called Red-White-Red Card. In addition, access to the labor market should be made easier for people from the Western Balkan countries. As the most important supporter of these countries for EU accession, it is only "logical" that the qualified workers from there also stay in Austria, said the President of the Chamber of Commerce.

"The bureaucratic roller is rolling and rolling and rolling down on us," continued Mahrer. He spoke out against the overfulfilment of EU minimum standards ("gold plating") and called for a program similar to the so-called Inflation Reduction Act, a subsidy program in the USA worth several hundred billion.

Trade must also be possible with China
According to IV President Knill, the capital market and exports also need to be strengthened. "Austria is an exporting country," said the industrialist. Germany, Austria's most important trading partner, must "get back on track" and fair trade - including with China - must be possible.

Investments in all types of infrastructure - digitalization, transport and energy - are also necessary. For example, "fast approval procedures" are needed for the expansion of renewable energies. According to Nehammer, investments in the expansion of childcare are also on the agenda.

Austria performs below average
According to a Wifo forecast for 2024 to 2028, the Austrian economy will grow at a slightly slower rate than the average for eurozone countries. This is primarily due to a deterioration in international competitiveness as a result of higher wage increases in Austria and a higher price level for energy. After stagnating this year, GDP is expected to grow by 1.5 percent in 2025, and by 2 percent in the most important Austro export markets.