ECI 2020/Q1: Competitiveness makes strong gains

Austria's competitiveness is making a strong start to the new decade despite a slowing economy. The EcoAustria Competitiveness Index (ECI) has risen by 2.7 points compared to the previous quarter and, at 100.7 points, is now at its highest level since 2016. The reason for the current rise is more direct investment from abroad and the increased international activity of Austrian companies. "Following the National Council elections and the conclusion of the coalition negotiations, there is hope for more stable times, despite the economic slowdown," says Tobias Thomas, Director of the economic research institute EcoAustria.

The task now is to improve the framework conditions for greater competitiveness in the long term. This includes reducing the tax burden on employees and companies, which is high by international standards. "Currently, only around half of what companies pay for an hour's work reaches employees due to the high taxes. This restricts private households' ability to consume and deprives companies of scope for more investment," says Thomas. In addition, climate policy instruments should be chosen in such a way that climate targets are achieved accurately and cost-effectively and unintended social side effects are avoided as far as possible. If it is possible to combine the goals of ecological, economic and social sustainability, Austria can act as a role model for many countries.

"With the current increase in the ECI, competitiveness in Germany has developed better than the EU average since 2016," says Thomas. Competitiveness has declined in countries that are particularly closely intertwined with the UK, among others. Since the Brexit referendum, for example, the Belgian ECI has fallen by a whopping 15 points.

The current results of the ECI are presented in the EcoAustria Competitiveness Monitor Q1/2020. Details on the methodology of the EcoAustria Competitiveness Index are documented in EcoAustria Research Paper No. 9.