OECD Economic Surveys

Austria enjoys high living standards, supported by strong institutions and a well-educated workforce. However, following the energy price shock in 2022, a prolonged recession disrupted the post-pandemic recovery. A substantial fiscal deficit has emerged, even as growth begins to pick up. Rising labour and energy costs have eroded firms' price competitiveness, while deeper structural weaknesses persist alongside stronger competition from new contenders. Ambitious fiscal consolidation is needed to restore fiscal space to cope with mounting spending pressures stemming from ageing, defence and climate challenges. There is scope to reduce social spending while improving the efficiency of health and long-term care service delivery. Bold structural reforms to boost business dynamism and raise productivity include easing regulation, accelerating digitalisation and strengthening competition in key markets. Restoring the affordability and improving the functioning of the housing market require streamlining and digitalising building permits and improving land use, revising property taxation and updating rents with income in the limited-profit housing sector.