Austria’s Trade Association Calls for Growth Reforms Amidst Economic Headwinds

Austria faces a period of economic stagnation, with real added value per capita projected to remain over three percent below 2019 levels in 2025, according to the Austrian Institute of Economic Research (WIFO). In response, the Austrian Trade Association has outlined a five-point program aimed at stimulating growth and ensuring the long-term sustainability of the welfare state.

Retail Sector: Resilience Amidst Challenges

Despite ongoing economic pressures, the Austrian retail sector is projected to see a slight increase in sales in 2025, reaching an estimated 79.8 billion euros. This represents a real increase of 1.0% compared to 2024, as reported by the Trade Association, citing WIFO data. However, this modest growth is occurring against a backdrop of significant cost pressures – including rising rents, personnel costs, energy prices, and logistics expenses – and a high rate of business bankruptcies. KSV1870 projections indicate 1,208 retail bankruptcies in 2025, averaging approximately 23 per week.

Five Pillars of the Trade Association’s Growth Agenda

1. Reducing Bureaucracy

The Trade Association is advocating for a substantial reduction in bureaucratic burdens, with a target of halving them by 2035. The organization argues that excessive regulation disproportionately impacts small and medium-sized enterprises (SMEs) and hinders investment. Proposed solutions include deregulation packages and the implementation of a “1-in-2-out” principle – requiring the removal of two existing regulations for every new one introduced.

2. Addressing Energy Sector Inflation

The association identifies limited competition within the energy sector, particularly due to cross-shareholdings, as a key driver of inflation. They propose dissolving these cross-shareholdings to foster greater competition and reduce energy costs, which they characterize as an “invisible tax” on both consumers and businesses.

3. Incentivizing Work and Performance

The Trade Association calls for reforms to the tax system to better incentivize work and reward performance. Specifically, they advocate for a flattening of tax progression and a gradual reduction in non-wage labor costs. The goal is to encourage employment, provide companies with greater financial flexibility for employee qualification and innovation.

4. Ensuring Fair Play in E-commerce

The association highlights competitive imbalances in the e-commerce landscape, particularly concerning platforms based outside of Austria. They argue that enforcement deficits, duty-free borders, and inaccurate product declarations give these platforms an unfair advantage over domestic retailers. The Trade Association proposes platform liability for accurate product information and tax declarations, coupled with stricter enforcement measures, including potential temporary bans for repeat offenders.

5. Leveraging AI and Mobilizing Capital

Recognizing the potential of Artificial Intelligence (AI), particularly generative systems, to boost productivity in sectors like retail and logistics, the Trade Association emphasizes the necessitate for increased access to capital. They point out that the European capital market is significantly smaller than that of the United States – roughly one-fourth the size – and advocate for measures to “catch up” and mobilize more growth capital within Europe.

A Holistic Approach to Economic Growth

Rainer Will, Managing Director of the Austrian Trade Association, emphasizes that the proposed reforms represent a comprehensive economic policy package. He argues that genuine economic relief, increased competition (especially in the energy sector), stronger work incentives, fair enforcement in cross-border e-commerce, and European collaboration on technology and capital markets are all essential for triggering sustainable growth. He believes that coordinated action offers a “great opportunity” for Europe to act as a unified economic force.