Policy Note 62: Austria’s competitiveness and the requirements of an industrial strategy

The current EcoAustria Competitiveness Index (ECI) shows no real trend reversal in the first half of 2025 either: Austria continues to lose competitiveness in a European comparison. Particularly in terms of investment, exports and productivity, the development is lagging behind that of other EU countries. In order to address these structural weaknesses, EcoAustria is presenting concrete proposals for a future-oriented industrial strategy in a new policy note. The aim is to improve the framework conditions for companies, accelerate innovation and sustainably strengthen the attractiveness of the location.

At the heart of the recommendations is the call for a cross-departmental strategy that systematically interlinks tax, labor market, energy, innovation and education policies. According to EcoAustria, individual measures or sectoral initiatives are not enough to structurally strengthen the location. Instead, a 'whole-of-government' approach with clear responsibilities, binding milestones and overarching control is needed in order to exploit synergies and avoid conflicts of objectives.

A key lever lies in the reduction of location costs. With a tax rate of 43.5 percent, Austria has a significantly higher rate than the eurozone average (40.6 percent). EcoAustria therefore recommends targeted tax relief, curbing energy and grid costs and increasing efficiency in the public sector in order to ease the burden on companies and facilitate investment. This also includes the consolidation of the subsidy system and a clearer distribution of tasks and funding between government levels in order to avoid duplicate structures and unnecessary bureaucracy.

EcoAustria also emphasizes the importance of stronger innovation and business dynamics. Investments in key technologies such as green tech, digitalization and life sciences, tax incentives for private investments and venture capital as well as the expansion of digital infrastructure are considered key success factors. International talent should be better integrated through targeted immigration programs, while innovation-friendly regulatory models - such as sandbox systems - can facilitate new business models.

EcoAustria also sees a considerable need for reform in the area of administration and regulation. Proposals such as the introduction of 'one in, one out' rules or sunset clauses, the digitalization of procedures, binding deadlines and better coordination between authorities should speed up approval processes and significantly reduce bureaucracy.

According to EcoAustria, in addition to a lower tax burden, the labor market also needs stronger incentives for full-time work, a higher labor force participation of older workers, the expansion of childcare and targeted qualification measures in technical and digital professions. Qualified immigration should also be made easier in order to meet the long-term demand for skilled workers.