The mood among Austrian business leaders has hit a new low as companies grapple with a shrinking economy and a waning competitive edge on the global stage. High taxes, surging energy costs, and a shortage of skilled labor are fueling doubts about Austria’s suitability as a business location. According to a recent survey, one in two companies is now considering relocating at least part of its operations abroad.
This drop in confidence reflects a broader, ongoing trend. Austria’s position in the global competitiveness rankings by the Lausanne-based Institute for Management Development (IMD) has been slipping for years. Ranked 16th in 2020, Austria has since fallen to 26th among 67 countries. Only 29% of managers currently view Austria as competitive, down significantly from 61% in 2020. This decline was echoed by managers surveyed in the Austrian Infrastructure Report, presented on Thursday, who expressed serious concerns about Austria’s global standing.
Rising Pressures in an Increasingly Competitive Global Landscape
Austria’s struggles are intensified by its competition with more dynamic economies worldwide. “BRICS countries, for instance, are achieving annual GDP growth rates eight times higher than the EU, and NAFTA countries are growing five times as fast,” explained David Ungar-Klein, author of the Austrian Infrastructure Report 2025 by the Future Business Austria (FBA) initiative. In addition to favorable tax policies, investors value regulatory stability, access to skilled labor, and solid infrastructure—particularly digital connectivity.
The survey results are stark: 56% of companies that could relocate operations have seriously considered doing so due to current economic conditions. Within this group, 17% would consider moving their entire operation, while 39% are weighing partial relocation.
Key reasons cited by Austrian managers include a heavy tax burden (57%), labor shortages (41%), high energy costs (34%), general inflation, and excessive bureaucracy (30%). Ungar-Klein warns that if manufacturing companies were to exit Austria, it could disrupt supply chain security. Europe’s share of global semiconductor production, for example, has declined from 44% in the early 1990s to just 8% in 2022, while China’s share has risen to 24%. Meanwhile, 80% of the pharmaceutical ingredients needed in Europe are now sourced from outside the EU, primarily from India and China.
Beyond labor shortages, managers also reported a decline in employee work ethic, with 57% observing a drop in motivation this year, up from 34% last year.
The Austrian Infrastructure Report emphasizes infrastructure’s central role—especially digital connectivity—in sustaining national productivity. Enhanced digital infrastructure could add an estimated €90 billion in productivity gains, according to report projections. Economist Andreas Reinstaller of the Productivity Council at Austria’s National Bank urged prioritizing digital and energy infrastructure to secure Austria’s long-term economic viability and prosperity.
Co-author of the report, Katharina Reinwald, underscored that a €10 billion investment in broadband and 5G infrastructure could unlock significant productivity gains. The report calls for a comprehensive “2040 Infrastructure and Site Strategy” inspired by Switzerland, aimed at strengthening Austria’s energy, transport, and digital infrastructure sectors.
With strategic investment in infrastructure and labor policies, Austria has an opportunity to restore confidence among its business leaders and secure long-term economic growth.
