The black-red-pink coalition has agreed on a one-billion-euro economic stimulus package during a government retreat. No new money will be allocated for this: €600 million had already been earmarked in this year’s budget for proactive measures, while additional funds are to be freed up through reallocations. Planned measures include investment incentives, support for energy-intensive companies, and funding for broadband expansion. Smaller measures against inflation were also announced.
Specifically, the government agreed to investment incentives by raising the investment allowance from 10 to 20 percent as of November 1, and from 15 to 22 percent for ecological investments. €220 million will be made available from the budget over the next two years for this purpose. This is a “clear incentive to make investments and to bring forward investments,” emphasized Economy Minister Wolfgang Hattmannsdorfer (ÖVP) at a press conference on Tuesday.
Support for energy-intensive companies
Energy-intensive companies are to receive €75 million this year and next. The corresponding law is to be sent out for review by the end of the week, according to Hattmannsdorfer. Relief will also come in the form of energy tax reductions. For broadband expansion, €40 million per year will be made available for the years 2027 to 2029. To mobilize more private capital, a location fund will be established.
Measures against “shrinkflation”
To fight inflation, the government is relying primarily on the EU to tackle the “Austria surcharge” in food retail. Several national measures are also planned. To counter “shrinkflation”—hidden price increases through shrinking package sizes—a legal requirement for labeling will be developed by the end of the year. The government also wants to form a “common front against price increases on basic foodstuffs” with domestic food retailers.
Additionally, Statistics Austria will set up a price-monitoring database starting in 2026 to identify unjustified pricing policies along the supply chain. The existing price commission will be restructured, and changes to unit pricing for better comparability and stricter controls are planned. The powers of the Federal Competition Authority will be strengthened to support comprehensive competition monitoring. The federal law to mitigate crisis effects and improve market conditions in cases of dominant energy providers will be extended until 2031.
Budget “on track,” says Marterbauer
Finance Minister Markus Marterbauer (SPÖ) pointed to the government’s limited options regarding economic stimulus and inflation. The budget situation does not allow for large-scale stimulus, so the focus is on improving framework conditions. In terms of the budget, “we are on track,” particularly at the federal level. Since most consolidation measures only took effect on July 1, the second half of the year will be “decisive.”
NEOS State Secretary Josef Schellhorn stressed the importance of doing everything possible during upcoming adjustments to counter inflation. Businesses must also be relieved through deregulation. The government plans to address this issue in a separate cabinet meeting later this year.
Labor market measures were also announced. Starting in 2026, €50 million per year will be allocated to the “55 Plus Initiative.” The ÖVP-driven tax and levy cuts for pensioners who continue working are scheduled to take effect in 2026 as planned. At the same time, the threshold for minor additional earnings will be frozen until the end of 2027. A task force will be set up on the hotly debated issue of part-time work to develop incentives and conditions for more working hours.
The government stressed Tuesday that the counter-financing is secured, but remained vague on details. It pointed to budget reallocations and cuts in subsidies. There is apparent agreement that pensions will be raised below inflation, i.e., under 2.7 percent, on a socially staggered basis. Negotiations on this are still pending.
The package of measures is set to be adopted by the Council of Ministers on Wednesday. Shortly before the two-day government retreat on the topics of economic stimulus and inflation began Tuesday, grim news emerged: according to a flash estimate by Statistics Austria, the inflation rate rose to 4.1 percent in August, significantly above the 2.1 percent rate in the eurozone. That is “far too high,” emphasized Chancellor Christian Stocker (ÖVP) at the start of the retreat at midday. The government aims to bring the inflation rate down to two percent next year.
At the retreat, the coalition is also setting the program for the next six months. For cost reasons, the three-party coalition is meeting at the Federal Chancellery.
FPÖ: Investment incentives positive, but too late
The coalition received rare approval from the FPÖ. Economic spokeswoman Barbara Kolm and budget spokesman Arnold Schiefer praised the investment incentives as the “right signal,” but said these measures should have already been implemented in June through a corresponding FPÖ motion in the National Council. Secretary General Michael Schnedlitz was more critical, accusing the government of pretending to act by shifting money that “doesn’t actually exist due to the enormous debt mountain.”
The Greens were not particularly enthusiastic either. Budget spokesman Jakob Schwarz saw “old wine in new bottles.” The government is leaving billions in climate-damaging subsidies untouched. For the industrial electricity bonus, even meaningful energy-efficiency subsidies are being cut.
The Federation of Austrian Industries (IV) and the Austrian Economic Chamber (WKÖ), however, welcomed the measures. Electricity price compensation for energy-intensive companies, deregulation, and the establishment of a location fund with growth incentives for startups are important impulses for economic growth, said the IV. In pensions and administration, however, it once again demanded structural reforms. The WKÖ welcomed the initiatives to make working longer more attractive and called for swift implementation of the investment allowance increase.
The Austrian Trade Union Federation (ÖGB), on the occasion of the retreat, again pushed for a cap on rent increases for private rentals and for a crisis mechanism in the planned Electricity Industry Act to intervene in case of energy market price hikes.
