Recommendation for a COUNCIL RECOMMENDATION on the 2023 National Reform Programme of Austria and delivering a Council opinion on the 2023 Stability Programme of Austria
Date: 2023-05-24
Institutions: European Commission, Secretariat-General
Subjects: Austria, economic policy, economic recovery, economic reform, energy policy, fiscal policy, green economy, labour market, stability pact, stability programme

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   EUROPEAN COMMISSION  Brussels, 24.5.2023  COM(2023) 620 final  Recommendation for a COUNCIL RECOMMENDATION on the 2023 National Reform Programme of Austria and delivering a Council opinion on the 2023 Stability Programme of Austria  {SWD(2023) 620 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the 2023 National Reform Programme of Austria and delivering a Council opinion on 
the 2023 Stability Programme of Austria 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 121(2) and 148(4) thereof, 

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of 
the  surveillance  of  budgetary  positions  and  the  surveillance  and  coordination  of  economic 
policies1, and in particular Article 5(2) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council2,  which 
established  the  Recovery  and  Resilience  Facility,  entered  into  force  on  19  February 
2021. The Recovery and Resilience Facility provides financial support to the Member 
States  for  the  implementation  of  reforms  and  investments,  entailing  a  fiscal  impulse 
financed  by  the  EU.  In  line  with  the  European  Semester  priorities,  it  contributes  to 
economic  and  social  recovery  and  to  the  implementation  of  sustainable  reforms  and 
investments,  in  particular  to  promote  the  green  and  digital  transition  and  make  the 
Member States’ economies more resilient. It also helps strengthen public finances and 
boost  growth  and  job  creation  in  the  medium  and  long  term,  improve  territorial 
cohesion  within  the  EU  and  support  the  continued  implementation  of  the  European 
Pillar of Social Rights. The maximum financial contribution per Member State under 
the Recovery and Resilience Facility was updated on 30 June 2022, in accordance with 
Article 11(2) of Regulation (EU) 2021/241.  

(2) 

On 22 November 2022, the Commission adopted the 2023 Annual Sustainable Growth 
Survey3,  marking  the  start  of  the  2023  European  Semester  for  economic  policy 

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2 

3 

OJ L 209, 2.8.1997, p. 1. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12  February  2021 
establishing the Recovery and Resilience Facility (OJ L 57, 18.2.2021, p. 17). 
COM(2022) 780 final. 

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coordination. The European Council endorsed the priorities of the  survey  around the 
four  dimensions  of  competitive  sustainability  on  23  March  2023.  On  22  November 
2022,  on  the  basis  of  Regulation  (EU)  No  1176/2011,  the  Commission  also  adopted 
the 2023 Alert Mechanism  Report, in  which it  did not  identify Austria as one of the 
Member States that may be affected or may be at risk of being affected by imbalances, 
and for which an in-depth review would be needed. On the same date, the Commission 
also adopted an opinion on Austria’s 2023 draft budgetary plan. The Commission also 
adopted a recommendation for a Council recommendation on the economic policy of 
the euro area, which the Council adopted on 16 May 2023, as well as the proposal for 
the 2023 Joint Employment Report analysing the implementation of the Employment 
Guidelines  and  the  principles  of  the  European  Pillar  of  Social  Rights,  which  the 
Council adopted on 13 March 2023.  

(3)  While the EU is showing remarkable resilience, the geopolitical context continues to 
have a negative impact. As the EU stands firmly with Ukraine, the EU economic and 
social policy agenda is focused on reducing the negative impact of energy shocks on 
both vulnerable households and companies in the short term, and on keeping up efforts 
to deliver on the green and digital transition, support sustainable and inclusive growth, 
safeguard macroeconomic stability and increase resilience in the medium term. It also 
focuses heavily on increasing the EU’s competitiveness and productivity. 

(4) 

(5) 

On  1  February  2023,  the  Commission  issued  the  Communication  on  A  Green  Deal 
Industrial  Plan  for  the  Net-Zero  Age4  to  boost  the  competitiveness  of  the  EU’s  net-
zero  industry  and  support  the  fast  transition  to  climate  neutrality.  The  plan 
complements  ongoing  efforts  under  the  European  Green  Deal  and  REPowerEU.  It 
aims to provide a more supportive environment for scaling up the EU’s manufacturing 
capacity  for  the  net-zero  technologies  and  products  required  to  meet  the  EU’s 
ambitious climate targets, as well as ensuring access to relevant critical raw materials, 
including  by  diversifying  sourcing,  properly  exploiting  geological  resources  in 
Member States and maximising the recycling  of raw materials. The Plan  is based on 
four pillars:  a predictable and simplified regulatory  environment,  speeding up access 
to finance, enhancing skills, and open trade for resilient supply chains.  On 16 March 
2023,  the  Commission  also  issued  the  Communication  Long-term  competitiveness  of 
the EU: looking beyond 20305, structured along nine mutually reinforcing drivers with 
the objective to work towards a growth enhancing regulatory framework. It sets policy 
improvements,  well  focused 
priorities  aimed  at  actively  ensuring  structural 
investments and regulatory measures for the long-term competitiveness of the EU and 
its Member States. The recommendations below help addressing those priorities. 

In 2023, the European Semester for economic policy coordination continues to evolve 
in  line  with  the  implementation  of  the  Recovery  and  Resilience  Facility.  Fully 
implementing  the  recovery  and  resilience  plans  remains  essential  for  delivering  the 
policy priorities under the European Semester, as the plans address all or a significant 
subset  of  the  relevant  country-specific  recommendations  issued  in  recent  years.  The 
2019, 2020 and 2022 country-specific recommendations remain equally relevant also 
for  recovery  and  resilience  plans  revised,  updated  or  amended  in  accordance  with 
Articles 14, 18 and 21 of Regulation (EU) 2021/241.  

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COM(2023) 62 final.  
COM(2023) 168 final.  

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(6) 

(7) 

(8) 

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8 

The REPowerEU Regulation6 adopted on 27 February 2023 aims to rapidly phase out 
the  EU’s  dependence  on  Russian  fossil  fuel  imports.  This  will  contribute  towards 
energy security and the diversification of the EU’s energy supply, while increasing the 
uptake of renewables, energy storage capacities and energy efficiency. The Regulation 
enables  Member  States  to  add  a  new  REPowerEU  chapter  to  their  national  recovery 
and  resilience  plans  in  order  to  finance  key  reforms  and  investments  that  will  help 
achieve the REPowerEU objectives. They will also help boost the competitiveness of 
the EU’s net-zero industry as outlined in the Green Deal  Industrial Plan for the Net-
Zero Age and address the energy-related country-specific recommendations issued to 
the  Member  States  in  2022  and,  where  applicable,  in  2023.  The  REPowerEU 
Regulation  introduces  a  new  category  of  non-repayable  financial  support,  made 
available  to  Member  States  to  finance  new  energy-related  reforms  and  investments 
under their recovery and resilience plans.  

On 8 March 2023, the Commission adopted a Communication providing fiscal policy 
guidance  in  2024.  It  aims to  support the preparation  of Member States’  stability  and 
thereby  strengthen  policy  coordination7.  The 
convergence  programmes  and 
Commission recalled that the general escape clause of the Stability and Growth Pact 
will be deactivated at  the end of 2023.  It  called  for fiscal  policies in  2023-2024 that 
ensure  medium-term  debt  sustainability  as  well  as  raise  potential  growth  in  a 
sustainable manner. Member States were invited to set out in their 2023 stability and 
convergence programmes how their fiscal plans will ensure that the 3% of GDP deficit 
reference value is adhered to as well as plausible and continuous debt reduction, or for 
debt  to  be  kept  at  prudent  levels  in  the  medium  term.  The  Commission  invited 
Member States to phase out national fiscal measures introduced to protect households 
and  firms  from  the  energy  price  shock,  starting  with  the  least  targeted  ones.  It 
indicated that, if support measures needed to be extended because of renewed energy 
price  pressures,  Member  States  should  target  such  measures  much  better  than  in  the 
past  towards  vulnerable  households  and  firms.  The  Commission  proposed  that  the 
fiscal  recommendations would be  quantified and differentiated  and be  formulated on 
the basis of net primary expenditure, as proposed in its Communication on orientations 
for  a  reform  of  the  EU  economic  governance  framework8.  It  recommended  that  all 
Member States should  continue to  protect  nationally  financed investment and ensure 
the  effective  use  of  the  Recovery  and  Resilience  Facility  and  other  EU  funds,  in 
particular  in  light  of  the  green  and  digital  transition  and  resilience  objectives.  The 
Commission  indicated  that  it  will  propose  to  the  Council  to  open  deficit-based 
excessive deficit procedures in spring 2024 on the basis of the outturn data for 2023, in 
line with existing legal provisions. 

On  26  April  2023,  the  Commission  presented  legislative  proposals  to  implement  a 
comprehensive reform of the EU’s economic governance rules. The central objective 
of the proposals is to strengthen public debt sustainability and promote sustainable and 
inclusive growth in all Member States through reforms and investments. The proposals 
aim at providing Member States with more control over the design of their medium-

Regulation  (EU)  2023/435  of  the  European  Parliament  and  of  the  Council  of  27  February  2023 
amending Regulation (EU) 2021/241 as regards REPowerEU chapters in recovery and resilience plans 
and  amending  Regulations  (EU)  No  1303/2013,  (EU)  2021/1060  and  (EU)  2021/1755,  and  Directive 
2003/87/EC (OJ L 63, 28.2.2023, p. 1). 
Communication  from  the  Commission  to  the  Council:  Fiscal  policy  guidance  for  2024,8.3.2023, 
COM(2023) 141 final. 
COM(2022) 583 final. 

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term plans, while putting in place a more stringent enforcement regime to ensure that 
Member  States  deliver  on  the  commitments  undertaken  in  their  medium-term  fiscal-
structural plans. The objective is to conclude the legislative work in 2023. 

On  30  April  2021,  Austria  submitted  its  national  recovery  and  resilience  plan  to  the 
Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant 
to  Article  19  of  Regulation  (EU)  2021/241,  the  Commission  assessed  the  relevance, 
effectiveness,  efficiency  and  coherence  of  the  recovery  and  resilience  plan,  in 
accordance with the assessment guidelines of Annex V to that Regulation. On 13 July 
2021,  the  Council  adopted  its  Decision  on  the  approval  of  the  assessment  of  the 
recovery and resilience plan for Austria9. The release of instalments is conditional on a 
decision  by  the  Commission,  taken  in  accordance  with  Article  24(5)  of  Regulation 
(EU)  2021/241,  that  Austria  has  satisfactorily  fulfilled  the  relevant  milestones  and 
targets  set  out  in  the  Council  Implementing  Decision.  Satisfactory  fulfilment 
presupposes  that  the  achievement  of  preceding  milestones  and  targets  has  not  been 
reversed. 

(10)  On  26  April  2023,  Austria  submitted  its  2023  National  Reform  Programme  and  its 
2023 Stability Programme, in line with  Article 4(1) of Regulation (EC)  No 1466/97. 
To  take  account  of  their  interlinkages,  the  two  programmes  have  been  assessed 
together.  In  accordance  with  Article  27  of  Regulation  (EU)  2021/241,  the  2023 
National Reform Programme also reflects Austria’s biannual reporting on the progress 
made in achieving its recovery and resilience plan.  

in 

addressing 

(11)  The Commission published the 2023 country report for Austria10 on 24 May 2023. It 
country-specific 
assessed  Austria’s  progress 
recommendations  adopted by  the Council  between 2019  and  2022 and took stock of 
Austria’s implementation of the recovery and resilience plan. Based on this analysis, 
the  country  report  identified  gaps  with  respect  to  those  challenges  that  are  not 
addressed  or  only  partially  addressed  by  the  recovery  and  resilience  plan,  as  well  as 
new and emerging challenges. It also assessed Austria’s progress on implementing the 
European  Pillar  of  Social  Rights  and  on  achieving  the  EU  headline  targets  on 
employment, skills and poverty reduction, as well as progress in  achieving the UN’s 
Sustainable Development Goals.  

relevant 

the 

(12)  Based on data validated by Eurostat,11 Austria’s general government deficit decreased 
from 5.8% of GDP in 2021 to 3.2% in 2022, while general government debt fell from 
82.3% of GDP at the end of 2021 to 78.4% at the end of 2022. On 24 May 2023, the 
Commission published a report under Article 126(3) TFEU;12 the report discussed the 
budgetary situation of Austria, as its general government deficit in 2022 exceeded the 
3% of GDP Treaty reference value. The report concluded that that the deficit criterion 
was fulfilled. In line with the Communication of 8 March 2023,13 the Commission did 
not  propose  to  open  new  excessive  deficit  procedures  in  spring  2023;  in  turn,  the 
Commission  stated  that  it  would  propose  to  the  Council  to  open  deficit-based 

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12 

13 

Council Implementing Decision of 13 July 2021 on the approval of the assessment of the recovery and 
resilience plan for Austria (ST 10159/2021; ST 10159/2021 ADD 1; ST 10159/2021 COR 1). 
SWD(2023) 620 final. 
Eurostat-Euro Indicators, 47/2023, 21.4.2023 

COM(2023) 631 final, 24.5.2023. 

COM(2023) 141 final, 8.3.2023. 

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excessive deficit procedures in spring 2024, on the basis of the outturn data for 2023. 
Austria  should  take  account  of  this  in  the  execution  of  its  2023  budget  and  in 
preparing the Draft Budgetary Plan for 2024. 

included 

the  postponement  of 

(13)  The  general  government  balance  has  been  impacted  by  the  fiscal  policy  measures 
adopted to mitigate the economic and social impact of the increase in energy prices. In 
2022,  such  revenue-decreasing  measures 
the 
introduction  of  a  CO2-price,  reduction  of  levies  on  energy,  and  tax  allowances  for 
commuters;  while  such  expenditure-increasing  measures  included  energy  cost 
subsidies  to  companies,  lump-sum  transfers  to  households,  and  direct  payments  to 
pensioners.  The  cost  of  these  measures  was  partly  offset  by  new  taxes  on  windfall 
profits  of  energy  producers  and  suppliers.  The  Commission  estimates  the  net 
budgetary  cost  of  these  measures  at  1.5%  of  GDP  in  2022.  The  general  government 
balance  has  also  been  impacted  by  the  budgetary  cost  of  temporary  protection  to 
displaced persons from  Ukraine, which is estimated at 0.2% of GDP in 2022. At the 
same time, the estimated cost of COVID-19 temporary emergency measures dropped 
to 0.8% of GDP in 2022, from 4.3% in 2021. 

(14)  On  18  June  2021,  the  Council  recommended  that  in  2022  Austria14  maintain  a 
supportive  fiscal  stance,  including  from  the  impulse  provided  by  the  Recovery  and 
Resilience Facility, and preserve nationally financed investment.  

(15)  According to the Commission estimates, the fiscal stance15 in 2022 was supportive, at  
- 2.8%  of  GDP,  as  recommended  by  the  Council.  Also  as  recommended  by  the 
Council, Austria continued to  support the recovery with  investments  financed by the 
Recovery  and  Resilience  Facility.  Expenditure  financed  by  Recovery  and  Resilience 
Facility grants and other EU funds amounted to 0.2% of GDP in 2022 (0.2% of GDP 
in 2021). Nationally financed investment provided a contractionary contribution of 0.1 
percentage  point  to  the  fiscal  stance.16  Austria  therefore  did  not  preserve  nationally 
financed  investment  which  is  not  in  line  with  the  Council  recommendation.  At  the 
same time, the growth in nationally financed primary current expenditure (net of new 
revenue measures) provided an expansionary contribution of 1.8 percentage points to 
the  fiscal  stance.  This  significant  expansionary  contribution  included  the  additional 
impact  of  measures  to  mitigate  the  economic  and  social  impact  of  the  increase  in 
energy prices (additional net budgetary cost of 1.5% of GDP), as well as the costs to 
offer temporary protection to displaced persons from Ukraine (0.2% of GDP). Austria 
therefore  sufficiently  kept  under  control  the  growth  in  nationally  financed  current 
expenditure. 

(16)  The macroeconomic scenario underpinning the budgetary projections in  the Stability 
Programme is realistic. The government projects real GDP to  grow by 0.3% in 2023 

14 

15 

16 

Council  Recommendation  of  18  June  2021  delivering  a  Council  opinion  on  the  2021  Stability 
Programme of Austria, OJ C 304, 29.7.2021, p. 93–97. 
The  fiscal  stance  is  measured  as  the  change  in  primary  expenditure  (net  of  discretionary  revenue 
measures), excluding Covid-19 crisis-related temporary emergency measures but including expenditure 
financed  by  non-repayable  support  (grants)  from  the  Recovery  and  Resilience  Facility  and  other  EU 
in 
funds, 
the Fiscal Statistical Tables.   

growth. For  more 

to  medium-term 

see  Box 1 

potential 

relative 

details 

Other  nationally  financed  capital  expenditure  is  projected  to  provide  an  expansionary  contribution  of 
0.9  percentage  points  of  GDP.  This  expansionary  contribution  is  largely  driven  by  the  purchase  of  a 
strategic gas reserve of about 0.8% of GDP.  

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and by 1.8% in 2024. By comparison, the Commission 2023 spring forecast projects a 
higher real GDP growth of 0.4% in 2023 and a lower real GDP growth rate of 1.6% in 
2024, mainly due to higher growth contribution from private consumption in 2023 and 
a lower growth contribution from public consumption in 2024. 

In its 2023 Stability Programme, the government expects that the general government 
deficit  ratio  will  remain  at  3.2%  of  GDP  in  2023.  According  to  the  Programme,  the 
general government debt-to-GDP ratio is expected to decrease from 78.4% at the end 
of 2022 to 77.0% at the end of 2023. The Commission 2023 spring forecast projects a 
government deficit of 2.4% of GDP for 2023. This is lower than the deficit projected 
in  the  Stability  Programme,  mainly  due  to  differences  in  the  expectations  of  the 
budgetary  impact  of  some  energy-related  measures,  especially  regarding  energy 
subsidies to companies. The Commission 2023 spring forecast projects a lower general 
government debt-to-GDP ratio, of 75.4% at the end of 2023. The difference is due to 
the difference in the expected government deficit. 

(18)  The  government  balance  in  2023  is  expected  to  continue  to  be  impacted  by  the 
measures adopted to mitigate the economic and social impact of the increase in energy 
prices. They consist of measures extended from 2022 (in particular: an electricity price 
brake)  and  new  measures  such  as  a  new  scheme  for  energy  cost  subsidies  to 
companies.  The  cost  of  these  measures  continues  to  be  partly  offset  by  taxes  on 
windfall  profits  of  energy  suppliers.  Taking  these  revenues  into  account  the  net 
budgetary  cost  of  the  support  measures  is  projected  in  the  Commission  2023  spring 
forecast at 1.8% of GDP in 202317. Most measures in 2023 do not appear targeted to 
the most vulnerable households or firms, and do not fully preserve the price signal to 
reduce  energy  demand  and  increase  energy  efficiency.  As  a  result,  the  amount  of 
targeted support measures, to  be taken into account  in  the assessment of compliance 
with the fiscal recommendation for 2023, is estimated in the Commission 2023 spring 
forecast  at  0.4%  of  GDP  in  2023  (compared  to  0.2%  of  GDP  in  2022).  Finally,  the 
2023  government  balance  is  expected  to  benefit  from  the  phasing  out  of  COVID-19 
temporary emergency measures of 0.8% of GDP. 

(19)  On  12  July  2022,  the  Council  recommended18  that  Austria  take  action  to  ensure  in 
2023 that the growth of nationally financed primary current expenditure is in line with 
an  overall  neutral  policy  stance19,  taking  into  account  continued  temporary  and 
targeted support to households and firms most vulnerable to energy price hikes and to 
people  fleeing  Ukraine.  Austria  should  stand  ready  to  adjust  current  spending  to  the 
evolving situation. Austria was also recommended to expand public investment for the 
green  and  digital  transitions,  and  for  energy  security  taking  into  account  the 
REPowerEU  initiative,  including  by  making  use  of  the  Recovery  and  Resilience 
Facility and other Union funds. 

(20) 

In  2023,  the  fiscal  stance  is  projected  in  the  Commission  2023  spring  forecast  to  be 
contractionary  (+ 1.0%  of  GDP),  in  a  context  of  high  inflation.  This  follows  an 
expansionary fiscal stance in 2022 (- 2.8% of GDP). The growth in nationally financed 
primary  current  expenditure  (net  of  discretionary  revenue  measures)  in  2023  is 

17 

18 

19 

The  figure represents the level of annual budgetary cost of those  measures, including current revenue 
and expenditure as well as – where relevant – capital expenditure measures. 
Council  Recommendation  of  12  July  2022  on  the  National  Reform  Programme  of  Austria  and 
delivering a Council opinion on the 2022 Stability Programme of Austria, OJ C 334, 1.9.2022, p. 162.  
Based  on  the  Commission  spring  2023  forecast,  the  medium-term  (10-year  average)  potential  output 
growth of Austria, which is used to measure the fiscal stance, is estimated at 8.6% in nominal terms. 

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projected to provide a contractionary contribution of 0.3 percentage points to the fiscal 
stance. This includes the increased cost of the targeted support measures to households 
and  firms  most  vulnerable  to  energy  price  hikes  by  0.2%  of  GDP.  In  sum,  the 
projected growth of nationally financed primary current expenditure is in line with the 
Council  recommendation.  Expenditure  financed  by  Recovery  and  Resilience  Facility 
grants  and  other  EU  funds  is  projected  to  amount  to  0.3%  of  GDP  in  2023,  while 
nationally financed investment is projected to provide an expansionary contribution to 
the  fiscal  stance  of  0.1  percentage  points.  Therefore,  Austria  plans  to  finance 
additional  investment  through  the  Recovery  and  Resilience  Facility  and  other  EU 
funds,  and  it  is  projected  to  preserve  nationally  financed  investment.20  It  plans  to 
finance public investment for the green and digital transitions, and for energy security, 
such  as  the  participation  in  the  international  project  of  common  European  interest 
the  public 
Microelectronics  and  Connectivity,  digitalization  of  SMEs  and 
administration as well as replacement of heating systems, which are partly funded by 
the Recovery and Resilience Facility and other EU funds. 

(21)  According  to  the  Stability  Programme  the  general  government  deficit  is  expected  to 
decline to 1.6% of GDP in 2024. The decrease in 2024 mainly reflects the phase-out of 
energy-related  measures.  The  programme  expects  the  general  government  debt-to-
GDP ratio to decrease to 75.1% at the end of 2024. Based on policy measures known 
at  the  cut-off  date  of  the  forecast,  the  Commission  2023  spring  forecast  projects  a 
government deficit of 1.3% of GDP in 2024. This is similar to the deficit projected in 
the  programme.  The  Commission  2023  spring  forecast  projects  a  lower  general 
government debt-to-GDP ratio, of 73.3% at the end of 2024. 

(22)  The Stability Programme envisages the phasing out of almost all of the energy support 
measures  in  2024  assuming  that  energy  prices  remain  on  a  downward  path.  The 
Commission  also  assumes  almost  full  phasing  out  of  energy  support  measures  (net 
cost  at  0.1%  of  GDP  in  2024).  These  estimates  hinge  upon  the  assumption  of  no 
renewed energy price increases. 

(23)  Council Regulation (EC) No 1466/97 calls for an annual improvement in the structural 
budget balance toward the medium-term objective by 0.5% of GDP as a benchmark.21 
Taking  into  account  fiscal  sustainability  considerations,22  an  improvement  in  the 
structural balance of at least 0.3% of GDP for 2024 would be appropriate. To ensure 
such an improvement, the growth in net nationally financed primary expenditure23 in 
2024 should not exceed 4.6%, as reflected in this recommendation. 

At the same time, the remaining energy support measures (currently estimated by the 
Commission  at  1.8%  of  GDP  in  2023)  should  be  phased  out,  contingent  on  energy 

20 

21 

22 

23 

Other nationally financed capital expenditure is projected to provide a contractionary contribution of 0.9 
percentage points of GDP. This contractionary contribution is a result of the purchase of a strategic gas 
reserve in 2022. 

Cf. Article 5 of Council Regulation (EC) No 1466/97, which also requires an adjustment of more than 
0.5%  of  GDP  for  Member  States  with  a  government  debt  exceeding  60%  of  GDP,  or  with  more 
pronounced debt sustainability risks. 
The Commission estimated that Austria would need an average annual increase in the structural primary 
balance as a share of GDP of 0.15 percentage points to achieve a plausible debt reduction or ensure that 
government  debt  is  kept  at  prudent  levels  in  the  medium  term.  This  estimate  was  based  on  the 
Commission autumn 2022 forecast. The starting point  for this estimate  was the projected government 
deficit and debt for 2024 which assumed the withdrawal of energy support measures in 2024.  
Net  primary  expenditure  is  defined  as  nationally  financed  expenditure  net  of  discretionary  revenues 
measures and excluding interest expenditure as well as cyclical unemployment expenditure. 

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market developments and starting from the least targeted ones, and the related savings 
should be used to reduce the government deficit. Based on Commission estimates, this 
would lead to a growth in net primary expenditure below the recommended maximum 
growth rate for 2024.  

(24)  Assuming  unchanged  policies,  the  Commission  2023  spring  forecast  projects  net 
nationally financed primary expenditure to grow at 4.0% in 2024, which is below the 
recommended  growth  rate.  The  adjustment  projected  in  the  Commission  forecast  is 
less  than  the  savings  from  the  full  phasing  out  of  energy  support  measures,  due  to 
expenditures  that  are  dependent  on  inflation  developments  in  2023,  for  example 
pension expenditures, compensation of employees, and some social benefits as well as 
due to some not yet phased-out energy measures. 

(25)  According  to  the  programme,  government  investment  is  expected  to  decrease  from 
3.5% of GDP in 2023 to 3.4% of GDP in 2024. The lower investment reflects lower 
nationally financed investment.  

(26)  The Stability Programme outlines a medium-term fiscal path until 2026. According to 
the  programme,  the  general  government  deficit  is  expected  to  gradually  decline  to 
1.4%  of  GDP  in  2025  and  to  1.3%  by  2026.  The  general  government  deficit  is 
therefore  planned  to  remain  below  3%  of  GDP  over  the  programme  horizon. 
According to the programme, the general government debt-to-GDP ratio is expected to 
decrease from 75.1% at the end of 2024 to 71.4% by the end of 2026. 

Austria faces medium risks to fiscal sustainability in the long term, which are mainly 
due to budget pressures related to population ageing (in particular, this includes rising 
expenditure for long-term care and healthcare), and increased debt due to measures to 
tackle the economic and social consequences of the COVID-19 and energy crises. The 
long-term  care  and  healthcare  sectors  are  also  facing  labour  shortages,  which  are  in 
part  linked  to  the  attractiveness  of  working  in  these  sectors.  A  care  reform  package 
recently  implemented  to  address  labour  shortages,  which  raises  wages  and  provides 
transfers to caregivers in the short term, is a good step in making the profession more 
attractive  but  will  also  raise  fiscal  costs.  In  2021,  a  task  force  on  long-term  care 
proposed  measures  to  improve  the  adequacy  of  care  while  preserving  fiscal 
sustainability.  These  measures  include  establishing  a  coordinated  control  mechanism 
with clear responsibilities assigned across various levels of government, which would 
help  to  raise  the  quality  and  comparability  of  public  spending,  for  example,  by 
defining uniform principles for tariffs. The ongoing negotiations on the federal fiscal 
framework  provide  an  opportunity  to  support  the  implementation  of  such  a 
mechanism.  

(27)  The  healthcare  system  proved  resilient  during  the  COVID-19  pandemic.  However, 
healthcare spending is projected to increase by 1.2 percentage points of GDP by 2070. 
Additionally,  preventive  measures  and  outpatient  primary  healthcare  remain 
underused, while many healthcare services are still provided by hospitals, which is a 
costly and inefficient way to provide care. The recovery and resilience plan will help 
to strengthen primary healthcare, in particular by supporting new and existing primary 
healthcare centres in local areas.  However, in view of fiscal sustainability concerns, it 
will  be  crucial  to  ensure  that  patients  are  guided  through  the  health  system  in  a 
consistent  way,  including  through  making  sure  that  the  increased  availability  of 
primary  care  services  will  translate  into  lower  utilisation  of  existing  hospital  or 
ambulatory specialist care services.  

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(28)  Austria’s fiscal framework currently relies on a complex system of intergovernmental 
transfers  between  federal  and  regional  authorities,  providing  limited  incentives  for 
efficient  public  spending.  The  lack  of  tax  autonomy  makes  funding  of  expenditure 
across federal levels highly dependent on this system. In 2018, only 5.4% of all public 
revenues  were own source revenues of the federal  states. At the same time, essential 
services such as healthcare, childcare and public transport investment depend partially 
on expenditure by the federal states and municipalities. Demographic change and the 
green transition further exacerbate the cost pressure on these bodies, while own source 
revenues  are  not  linked  to  expenditure  dynamics.  The  current  fiscal  framework  is 
prone to inefficiencies and a lack of transparency, as it blurs the link between the tax 
burden  and  government  expenditure.  Better  aligning  own-source  revenues  with  sub-
central  spending  and  strengthening  transparency  and  coordination  are  crucial  for 
improving  the  overall  quality  of  public  spending.  Facilitating  regional  tax  autonomy 
by reforming the property tax system  could be used to improve fiscal federalism and 
the overall tax system. The ongoing negotiations, which started in late 2022, provide 
an opportunity to make progress. 

(29)  There  is  still  scope  for  shifting  the  tax  burden  away  from  labour  to  more  growth-
friendly  and  inclusive  revenue  sources.  The  tax  system  is  characterised  by  a  high 
burden on labour, stemming from payroll taxes and social security contributions, with 
social  security  contributions  being  borne  by  both  employees  and  employers.  This 
creates  a  drag  on  job  creation  and  participation  in  the  labour  market,  especially  for 
low-wage and second earners. At the same time, other sources of revenues that are less 
detrimental  to  fair  and  sustainable  growth,  such  as  environmental  or  property  taxes, 
remain  underutilised,  even  after  taking  recent  reforms  into  account.  Environmentally 
harmful  subsidies  hamper  the  green  transition.  The  recent  eco-social  tax  reform 
provides  tax  relief  to  households  and  businesses  and  lays  the  foundation  for  pricing 
CO2  emissions.  Furthermore,  the  automatic  indexation  of  personal  income  tax  with 
inflation  is  a  notable  reform  that  reduces  the  increase  in  taxpayers’  personal  income 
tax  burden  through  inflation  pushing  salaries  into  higher  tax  brackets  Nevertheless, 
structural  challenges  persist  and  there  is  scope  for  further  reducing  the  burden  on 
labour,  to  boost  job  creation  and  labour  supply,  especially  for  low-income  earners. 
Making better use of more growth-friendly taxes could also help create the necessary 
budget space and improve the fairness of the tax system. 

(30) 

In accordance with Article 19(3), point (b) and Annex V, criterion 2.2 of Regulation 
(EU) 2021/241, the recovery and resilience plan includes an extensive set of mutually 
reinforcing  reforms  and  investments  to  be  implemented  by  2026.  Proceeding  swiftly 
with  the  implementation  of  the  plan  is  essential  due  to  the  temporary  nature  of  the 
Recovery and Resilience Facility in place until 2026. The implementation of Austria’s 
recovery  and resilience plan is  well underway.  Austria submitted  1 payment request, 
corresponding  to  44  milestones  and  targets  in  the  plan  and  resulting  in  an  overall 
disbursement of EUR 700 million on 20 April 2023. Beyond the first payment request, 
the implementation of the plan is on track. Austria is expected to submit a request to 
modify  a  few  measures  due  to  objective  circumstances,  such  as  price  increases  and 
supply  chain  shortages.  The  preparation  of  a  new  REPowerEU  chapter  is  also 
underway  and  the  authorities  are  working  closely  with  the  Commission  services  to 
submit it shortly. The swift inclusion of the new REPowerEU chapter in the recovery 
and  resilience  plan  will  allow  additional  reforms  and  investments  to  be  financed  in 
support of Austria’s strategic objectives in the field of energy and the green transition. 
The  systematic  and  effective  involvement  of  local  and  regional  authorities,  social 
partners  and  other  relevant  stakeholders  remains  important  for  the  successful 

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implementation  of  the  recovery  and  resilience  plan,  as  well  as  other  economic  and 
employment policies going beyond the plan, to ensure broad ownership of the overall 
policy agenda.  

(31)  The Commission  approved  all of Austria’s cohesion  policy  programming  documents 
in 2022. Proceeding with the swift implementation of the cohesion policy programmes 
in  complementarity  and  synergy  with  the  recovery  and  resilience  plan,  including  the 
REPowerEU  chapter,  is  key  to  achieving  the  green  and  digital  transition,  increasing 
economic  and  social  resilience  as  well  achieving  balanced  territorial  development  in 
Austria. 

(32)  Beyond the economic and social challenges addressed by the recovery and resilience 
plan,  Austria  faces  a  number  of  additional  challenges  related  to  the  labour  market. 
Austria’s  strong  social  protection  system  and  extensive  policy  measures  limited  the 
social impact of the COVID-19 pandemic. Austria performs well on most dimensions 
of  the  European  Pillar  of  Social  Rights,  but  some  challenges  remain.  In  particular, 
these  include  the  under-used  labour  market  potential  of  women,  low-qualified 
workers,  older  workers  and  people  from  a  migrant  background.  This  is  particularly 
problematic  given  the  shortage  of  skilled  labour.  Unlocking  the  unused  potential  of 
these groups could reduce the pressure on the Austrian labour market, which is faced 
with shortages. 

(33)  Although  the  female  employment  rate  in  Austria  is  higher  than  the  EU  average,  the 
country  has  the  second  highest  rate  of  part-time  employment  of  women.  More  than 
half of Austrian women worked part-time in 2022 and women are overrepresented in 
low-paying  sectors.  This  indicates  a  significant  opportunity  for  increasing  their  full-
time  participation  in  the  labour  market.  However,  the  insufficient  provision  of 
affordable and high-quality childcare, in particular in rural areas, makes it challenging 
for mothers to participate more actively. Austria has one of the lowest rates of formal 
childcare for children under three years of age in the EU, with only 28% of children in 
formal childcare. To address these issues, it is crucial to increase the supply of quality 
childcare by improving quality standards, extending availability and encouraging full-
time  employment,  e.g.  through  tax  incentives.  Bringing  more  women  into  full-time 
work could also help close Austria’s persistently high gender pay gap, as well the high 
gender pension gap, while addressing labour market shortages.  

(34)  There is still potential to improve the integration of several disadvantaged groups into 
the  labour  market,  particularly  low-skilled  workers  and  those  with  a  migrant 
background. Around 45% of the long-term unemployed in Austria have completed at 
most lower secondary school. People with a migrant background have a significantly 
lower labour market participation than native-born residents, and future income levels 
for  children  in  Austria  are  often  determined  by  those  of  their  parents.  Although 
Austria’s  recovery  and  resilience  plan  includes  measures  to  promote  reskilling  and 
upskilling for low-skilled workers and the long-term unemployed, these measures do 
not  fully  address  the  underlying  participation  problem  for  people  with  a  migrant 
background  and 
to  break  Austria’s  persistent 
intergenerational  link  between  educational  outcomes  of  parents  and  their  children,  it 
will be particularly crucial to increase the availability of high-quality early childhood 
education,  all-day  schooling  and  improved  digital  infrastructure.  To  integrate  recent 
migrants  and  other  disadvantaged  groups,  schools  could  provide  better  individual 
language  courses  could  be  made  more  accessible  and  Austria’s 
mentoring, 
apprenticeship system could be used more effectively. At the same time, it is essential 

low-skilled  workers.  In  order 

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to provide sufficient opportunities for lifelong learning, to target disadvantaged groups 
in all age groups.  

(35)  There is scope to improve the labour market participation of older workers, i.e. people 
aged 55-64. Recently, the long-term trend of increasing labour market participation of 
older workers has slowed significantly, while the overall activity rate of older workers 
is  below  the  EU  average.  Adapting  employees’  tasks  to  their  work-life  cycle  and 
accommodating  the  needs  of  ageing  individuals  will  become  increasingly  important 
for  keeping  the  ageing  population  in  the  workforce  longer.  Better  incentives  to 
increase the effective retirement age, such as lower labour taxation or non-wage labour 
costs  for  those  working  for  longer,  would  help  alleviate  shortages  in  the  Austrian 
labour market.  

(36)  Russia’s invasion of Ukraine has exposed the vulnerability of Austria’s energy supply 
security.  Although  Austria  managed  to  somewhat  reduce  its  reliance  on  gas  imports 
from  Russia,  which  were  down  to  57%  of its  total  gas  imports  in  2022 compared  to 
80% in 2021, they remain significantly above the EU average. To diversify its energy 
sources,  the  government  introduced  financial  incentives  for  companies  to  import  gas 
from  non-Russian  sources  and  established  a  strategic  gas  reserve  in  2022. 
Nevertheless, Austria still faces significant challenges in ensuring energy security. The 
country still lacks a clearly defined near-term path to fully decouple from Russian gas 
imports.  Moreover,  there  remains  underused  potential  in  the  production  and 
transmission of renewable gases such as hydrogen, especially for sectors and regions 
vulnerable to supply disruptions.  

(37) 

In 2021, the share of renewable energy in Austria stood at 37%, which is significantly 
above  the  EU  average.  To  achieve  Austria’s  climate  objectives,  which  include 
reaching  climate  neutrality  by  2040,  the  country  needs  to  further  expand  this  share. 
The 2021 Renewables Expansion Act, a reform included in the recovery and resilience 
plan, has created a framework that will help increase the share of renewable energy in 
electricity  consumption.  The  reform  aims  to  achieve  a  yearly  electricity  generation 
capacity of 27 TWh from renewables by 2030, which will contribute to the country’s 
target of reaching 100% renewable electricity consumption by that  year, up from the 
current 81% in 2020. However, further expansion of renewables still faces challenges, 
such as the length of spatial planning and permitting procedures, a complex division of 
powers  between  the  federal  and  regional  governments  and  staffing  issues  in  the 
administration.  Austria  has  taken  a  first  step  in  introducing  a  more  streamlined 
environmental impact assessment  for renewable  energy  projects.  In  addition,  Austria 
could better align spatial zoning with its green transition goals, fix issues with staffing 
and  increase  investment  in  network  infrastructure  such  as  storage,  distribution,  and 
transmission.  Renewables  expansion  would  also  benefit  from  putting  in  place 
dedicated  acceleration  areas  for  renewables  (in  particular  for  wind)  with  particularly 
short and simple permitting procedures, and the recognition of renewable energy as an 
overriding public interest, in line with the more ambitious renewable energy targets in 
the ‘Fit for 55’ package and the REPowerEU plan. Furthermore, additional sources of 
renewable energy, such as geothermal energy, could be further explored. 

(38)  Austria’s  consumption  of  natural  gas  has  dropped  by  19%  in  the  period  between 
August 2022  and March 2023, compared with the average gas consumption over the 
same period in the preceding 5 years, beyond the 15% reduction target. Austria could 

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keep  pursuing  efforts  to  temporarily  reduce  gas  demand  until  31  March  202424.  In 
addition,  increasing  the  level  of  ambition  for  energy  efficiency  in  the  building  and 
manufacturing  sectors  would  reduce  reliance  on  fossil  fuels.  Austria’s  long-term 
renovation  strategy  sets  clear  milestones  for  2050  and  aims  to  achieve  an  80% 
decarbonisation  of  its  building  stock.  The  recovery  and  resilience  plan  also  aims  to 
phase  out  fossil  fuel  boilers  in  the  building  sector  and  replace  them  with  renewable 
heating  technology  or  district  heating.  However,  Austria’s  2030  energy  efficiency 
targets are not ambitious enough to meet the objectives of the ‘Fit for 55’ package and 
the REPowerEU plan. A new Energy Efficiency Law, which is expected in 2023 and 
aims to reduce final energy consumption by 18% by 2030, should address this issue. 
Overall, it will be essential for Austria to accelerate investment in the deep renovation 
of buildings, replace fossil fuels with renewables in heating, and better manage energy 
consumption  through  utility  digitalisation  (such  as  smart  meters  and  thermostats). 
Furthermore,  it  will  be  crucial  that  the  current  slow  pace  at  which  buildings  are 
undergoing  thermal  renovation  is  speeded  up.  The  timely  implementation  of  the 
Renewable  Heating  Law,  a  flagship  reform  in  the  Austrian  recovery  and  resilience 
plan, will be key to tackling the issue.  

(39)  Embarking  on  the  green  transition  will  also  include  reducing  emissions  in  some 
sectors,  especially  those  stemming  from  transport,  a  sector  with  significant  potential 
for  emissions  reductions.  Austria  currently  serves  as  a  significant  transit  country  for 
transalpine road freight.  Despite a number of sustainable transport investments under 
the Austrian recovery and resilience plan, reducing transport-related emissions further, 
while  simultaneously  addressing  transport  poverty,  will  be  essential  for  achieving 
carbon  neutrality.  Developing  additional  transport  solutions,  such  as  connecting  the 
‘last mile’, and alternatives to car use, will also be key, especially in rural areas.  

Labour  and  skills  shortages  in  sectors  and  occupations  key  for  the  green  transition, 
including  manufacturing,  deployment  and  maintenance  of  net-zero  technologies,  are 
creating  bottlenecks  in  the  transition  to  a  net-zero  economy.  High-quality  education 
and  training  systems  that  respond  to  changing  labour  market  needs  and  targeted 
upskilling and reskilling measures are key to reducing skills shortages and promoting 
labour inclusion and reallocation.  To unlock untapped labour supply,  these  measures 
need  to  be  accessible,  in  particular  for  individuals  and  in  sectors  and  regions  most 
affected by the green transition. In 2022, labour shortages were reported in Austria for 
17  occupations  that  required  specific  skills  or  knowledge  for  the  green  transition, 
including  civil  engineering  technicians,  roofers  and  mechanical  engineers.  Under  its 
‘Green  jobs  masterplan’,  Austria  has  introduced  a  green  job  platform  to  help  match 
labour demand and supply in the environmental sector and implementing the plan will 
be key to ensuring a timely transition to the green economy. 

(40) 

(41) 

In light of the Commission’s assessment, the Council has examined the 2023 Stability 
Programme and its opinion25 is reflected in recommendation (1) below.  

In view of the close interlinkages between the economies of euro area Member States 
and  their  collective  contribution  to  the  functioning  of  the  Economic  and  Monetary 
Union, the Council recommended that euro area Member States take action, including 
through  their  recovery  and  resilience  plans,  to  (i)  preserve  debt  sustainability  and 
refrain  from  broad-based  support  to  aggregate  demand  in  2023,  better  target  fiscal 

24 
25 

Council Regulation (EU) 2022/1369 and Council Regulation (EU) 2023/706 
Under Articles 5(2) and 9(2) of Council Regulation (EC) No 1466/97. 

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measures taken to mitigate the impact of high energy prices and reflect on appropriate 
ways to wind down support as energy price pressures diminish; (ii) sustain high public 
investment and promote private investment to support the green and digital transition; 
(iii)  support  wage  developments  that  mitigate  the  loss  in  purchasing  power  while 
limiting  second-round  effects  on  inflation,  further  improve  active  labour  market 
policies  and  address  skills  shortages;  (iv)  improve  the  business  environment  and 
ensure that energy support to companies is cost-effective, temporary, targeted to viable 
firms  and  that  it  maintains  incentives  for  the  green  transition;  and  (v)  preserve 
macro-financial  stability  and  monitor  risks  while  continuing  to  work  on  completing 
the  Banking  Union.  For  Austria,  recommendations  (1),  (2),  (3)  and  (4)  contribute  to 
the implementation of the first, second and third euro area recommendations.  

HEREBY RECOMMENDS that Austria take action in 2023 and 2024 to:  

1. 

Wind  down  the  energy  support  measures  in  force  by  the  end  of  2023  using  the 
related  savings  to  reduce  the  government  deficit.  Should  renewed  energy  price 
increases  necessitate  support  measures,  ensure  that  these  are  targeted  at  protecting 
vulnerable  households  and  firms,  fiscally  affordable  and  preserve  incentives  for 
energy savings.  

Ensure  prudent  fiscal  policy,  in  particular  by  limiting  the  nominal  increase  in 
nationally-financed net primary expenditure in 2024 to not more than 4.6%. 

Preserve nationally-financed public investment and ensure the effective absorption of 
RRF  grants  and  other  EU  funds,  in  particular  to  foster  the  green  and  digital 
transitions.  For  the  period  beyond  2024,  continue  to  pursue  a  medium-term  fiscal 
strategy  of  gradual  and  sustainable  consolidation,  combined  with  investments  and 
reforms  conducive to higher sustainable growth, to achieve a prudent medium-term 
fiscal position. 

Ensure  the  adequacy  and  fiscal  sustainability  of  the  long-term  care  system  and  the 
fiscal  sustainability  of  the  health  care  system.  Simplify  and  rationalise  fiscal 
relationships  and  responsibilities  across  layers  of  government  and  align  financing 
and  spending  responsibilities.  Improve  the  tax  mix  to  support  inclusive  and 
sustainable growth. 

Continue  the  steady  implementation  of  its  recovery  and  resilience  plan  and  swiftly 
finalise the REPowerEU chapter with a view to  rapidly starting its implementation. 
Proceed  with  the  speedy  implementation  of  cohesion  policy  programmes,  in  close 
complementarity and synergy with the recovery and resilience plan.  

Boost  labour  market  participation  of  women,  including  by  enhancing  quality 
childcare  services,  and  of  older  workers,  and  improve  labour  market  outcomes  for 
disadvantaged  groups,  such  as  low-skilled  jobseekers  and  people  with  a  migrant 
background, including by raising their levels of basic skills. 

2. 

3. 

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4. 

Reduce  overall  reliance  on  fossil  fuels  and  diversify  gas  supply  sources  to 
significantly  decrease  dependence  on  Russia.  Accelerate  the  deployment  of 
renewable  energy  and  the  necessary  infrastructure,  in  particular  by  simplifying 
permitting  procedures  and  putting  in  place  dedicated  acceleration  areas.  Improve 
energy  efficiency.  Reduce  emissions,  in  particular  in  the  transport  sector.  Step  up 
policy efforts aimed at the provision and acquisition of the skills needed for the green 
transition. 

Done at Brussels, 

For the Council 
The President 

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