Deloitte radar: Austria as a business location in ongoing crisis

Improvements are not expected in the coming months. According to analysts, structural reforms are necessary in order not to endanger prosperity.

“Austria’s business location has not been able to get out of crisis mode for years. On the contrary: in the IMD’s current competitive ranking, we once again only reach 26th place and remain well behind comparable European countries such as Switzerland, Denmark or Sweden,” said Harald Breit, CEO of Deloitte Austria, in a press release. The ranking mentioned is the renowned competitiveness ranking of the Lausanne business school IMD. In 2025, 69 economies were compared.

Every second company affected by the Middle East war

The local economy has been struggling for several years. After the recession years of 2023 and 2024, there was moderate growth in domestic gross domestic product (GDP) again in 2025. A further upswing would have been expected for this year, but the Iran war that began at the end of February severely clouded economists’ prospects.

According to the Deloitte survey, every second company is directly affected by the war in the Middle East. Around a third of companies perceive the current mood at the location as negative or very negative, while only 14 percent see the mood as positive. Managers are particularly concerned about high energy costs (61 percent). Excessive bureaucracy (58 percent), high taxes and duties (37 percent) and general uncertainty (53 percent) are also perceived as problematic. Deloitte sees this as a source of danger: companies could migrate or bankruptcies could increase. Both would further restrict competitiveness.

Structural reforms and budget restructuring required

Against this background, analysts believe structural reforms are essential. “It takes an open and ruthless inventory as well as the political will to implement far-reaching structural reforms,” said Breit. The government’s decision to reduce non-wage labor costs is a first step, but more is needed. “A reduction of three percentage points by 2028 with clear counter-financing, for example through efficiency improvements in the state and growth-related additional revenue, is necessary,” said Deloitte partner Herbert Kovar.

In addition to cost reductions, the managers surveyed would primarily like to see the state budget restructured, funding for investments and more legal certainty in order to be able to plan investments better. In addition, the availability of workers is rated as poor by around one in five companies. For Kovar, among other things, there is a need for more attractive conditions for older employees. In addition, full-time work must be made more attractive.