ECI 2019/Q3: Competitiveness weakens in uncertain times

"Austria's competitiveness is weakening in uncertain times," says Tobias Thomas, Director of the economic research institute EcoAustria. The EcoAustria Competitiveness Index (ECI), which measures the development of competitiveness on the basis of net exports and direct investments at home and abroad on a quarterly basis, has fallen by 1.2 points to 97.4 points. The main reason for the decline is less direct investment from abroad.

"For investors and companies, it is currently unclear how the location conditions in Austria will develop. Regardless of who wins the election on September 29, a significant reduction in the high burden of taxes and non-wage labor costs on labor and companies would be advisable to increase competitiveness. To prevent the tax ratio from rising again, cold progression should also be ended and the retirement age should be linked to life expectancy," says Thomas.

Internationally, Brexit is now having a significant impact on British competitiveness. The ECI for the UK has slumped by 5.2 points. Economies with strong ties to the UK, such as Belgium, had already experienced this development beforehand. "Especially in times when the unclear outcome of Brexit and Trumpism in trade policy are causing uncertainty worldwide, measures to increase local competitiveness can provide more security," says Thomas.

The current results of the ECI are presented in the EcoAustria Competitiveness Monitor Q3/2019. Details on the methodology of the EcoAustria Competitiveness Index are documented in EcoAustria Research Paper No. 9.