Austria’s competitiveness is under pressure from high energy prices. Although energy prices are currently falling again, in the medium term they will not return to pre-energy crisis levels caused by the war in Ukraine. This was emphasized by the head of the Austrian Institute for Economic Research (WIFO), Gabriel Felbermayr, on Wednesday. WKÖ Secretary-General Karlheinz Kopf (ÖVP) calls for an extension of the electricity price compensation for companies based on the German model.
Commissioned by the Austrian Chamber of Commerce (WKÖ), WIFO investigated in various scenarios how high energy prices affect domestic competitiveness. In the worst-case scenario, industrial production could fall by 7 percent from pre-coronavirus levels.
Energy-intensive sectors such as the paper, chemical or glass industry, but also the textile and animal feed industry are more severely affected by high energy prices.
demands on politicians
Austria is more affected by the energy crisis than other countries because it is heavily dependent on Russian gas imports and electricity prices are higher than in Germany, for example. Politicians should therefore support the industry’s switch to renewable energy sources and ensure better framework conditions, for example through an effective law to protect the climate, says Felbermayr.
The Climate Protection Act determines the size of the greenhouse gas budget that Austria has available each year and who is allowed to emit how many emissions. The Climate Protection Act expired over two and a half years ago without replacement.
E-Control boss in video: ‘Energy prices are going to fall’
Companies are afraid of the future
WIFO also asked the companies for their opinion. About 300 companies participated in the survey. About half of the companies expect their competitive position to deteriorate compared to European and non-European competitors if energy prices remain high. 47 percent of the companies surveyed indicated that the relocation of production steps to countries outside the EU was promoted by high energy prices. The WIFO boss views this development with concern. Export-oriented industrial companies would provide good jobs, especially in rural areas, for people with a lower level of education.
Head also wants to reduce indirect labor costs
WKÖ Secretary General Karlheinz Kopf (ÖVP) argued for an extension of the electricity price compensation for companies given the results of the WIFO investigation. So far, it is only valid for one year and must be renewed annually, while in Germany it is valid until 2030. Head wants an industrial electricity price that the companies can calculate in the long term. Kopf also reiterated his call for a reduction in indirect labor costs and faster approval processes.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
