Financial expert criticizes economic policy initiatives in Austria in 2023

Financial expert criticizes economic policy initiatives in Austria in 2023

According to a report by www.profil.at, the year 2023 was a year to forget for Gabriel Felbermayr, head of the Economic Research Institute (WIFO). He summarized that things have been going downhill in many areas of the economy since 2022 and Austria is in a recession. The Institute for Advanced Studies (IHS) also assumes this.

The multiple crises are fueling dissatisfaction among the population with those in power. In the current year, politicians tried to respond to the economic problems with seemingly simple solutions.

Cash in the constitution
In the summer of this year, Chancellor Karl Nehammer (ÖVP) called for cash to be protected in the constitution. However, he received a lot of criticism for this. The discussion was sparked by the introduction of the digital euro as an additional means of payment, decided by the EU Commission. However, there are no efforts to abolish cash either in Austria or at EU level. An upper limit on cash payments was also discussed to prevent money laundering. The Austrian National Bank (OeNB) expects a limit of between 7,000 and 10,000 euros.

One ATM per municipality
It was discussed that banks in smaller communities are no longer fulfilling their cash supply responsibilities. The SPÖ therefore called for its own “cash supply law” to secure cash across the board. However, the Austrian National Bank has found that two thirds of Austrians can find an ATM just one kilometer from their home. Austria is one of the European countries with the most ATMs per capita.

Government cap inflation
The SPÖ proposed enshrining a maximum price increase of two percent per year for basic foodstuffs, rent, electricity and heat in the constitution. Economic researchers and critics did not find much to gain from this proposal and expressed concerns.

As a financial expert, it is to be expected that discussions about cash, inflation and ATM supply, while important topics, can also have an impact on confidence in the economy and the government. It is important that economic policy decisions are made soundly and carefully in order to maintain confidence in the economy and the financial system.