Economic Impact of an Increased Bank Levy

Bank levy: EcoAustria study highlights negative impact on investment and employment

A new EcoAustria study commissioned by the Austrian Federal Economic Chamber (WKO) analyzes the economic impact of permanently extending the special bank levy, which was introduced as part of the budget consolidation for 2025 and 2026 and is set to be extended in the 2027/2028 biennial budget. The results show that such a measure directly affects businesses and households through rising lending rates, thereby dampening investment, employment, and growth. At the same time, the net fiscal effect is significantly lower than the immediate revenue generated by the levy.

The analysis is based on empirical literature on bank levies in Europe as well as on simulations using the PuMA macroeconomic model. The assumption is that the levy will largely be passed on to borrowers. Empirical findings—particularly from Germany—suggest that banks often pass on higher costs through rising loan interest rates, which results in lower demand for credit. The simulation results show significant effects on the real economy: as early as 2027 and 2028, business investment will fall by more than 700 million euros; in the medium to long term, it will be approximately 300 million euros lower than in a scenario without the special levy. As a result, employment and income decline, with a loss of 800 to 1,400 jobs and rising unemployment. Real GDP also falls by more than 400 million euros in the long term. At the same time, net revenue from the levy remains well below expected revenues and continues to decline in the medium and long term. The study thus highlights a conflict of economic policy objectives between short-term budget consolidation and long-term effects on growth and the revenue base.