• Post-crisis investment activity recovered faster than for EU as a whole
  • R&D investment on the rise
  • Less rigid regulatory framework for business and labour market could further enhance investment

Austria is a structurally sound economy with a high quality of infrastructure and capital. Post-crisis, investment activity recovered faster than for the EU as a whole, powered most recently by investment in machinery and equipment. R&D investment in relation to GDP is also on the rise in Austria, driven particularly by large firms, although some innovative firms still face credit constraints. These companies should diversify their funding base to strengthen future competitiveness. At the same time, Austria needs to improve its financial ecosystem for alternative forms of investment funding.

These are the main findings of the annual EIB Survey 2017 on Investment and Investment Finance (EIBIS) in Austria. The findings were discussed on 16 April 2018 at a conference in Vienna organised jointly by the European Investment Bank (EIB) and the National Bank of Austria (OeNB). The latest edition of the traditional EIB corporate survey was complemented by a one-off municipal survey, providing additional valuable information about local authorities’ investment needs and capital accumulation barriers at local level. 

Andrew McDowell, Vice-President of the EU bank and responsible for the EIB’s business in Austria, emphasised at the conference: “The Austrian economy is well under way. Nearly nine out of ten Austrian firms invested in 2017, only 12% of the companies reported investing too little over the last three years. This is one of the smallest investment gaps in Europe. However, some companies, in particular very innovative firms, are still facing funding constraints. For these firms a more diversified form of finance is needed, which can be provided via collateral and guarantee products from the EIB Group in an environment of abundant liquidity.” 

Debora Revoltella, Director of the Economic Department at the European Investment Bank (EIB), underlined the fact that: “Austria´s economy is sound. Post-crisis investment activity recovered faster than for the EU as a whole. Nevertheless, more firms in Austria than on average in the EU regard the business and labour market regulatory environment and skill mismatches as major obstacles to investment. This is where national authorities should act swiftly.  If not, Austria risks hampering future investment.”

Ewald Nowotny, Governor of the OeNB, emphasized the contribution of macroeconomic stability to investment spending. “Price stability makes the investment environment better foreseeable and yields better investment decisions. Well-regulated and well-capitalized banks reduce uncertainty in credit supply and are less prone to financial crises. Good regulation, effective supervision and sustainable growth do not contradict each other: they go hand in hand.”

Main findings of the EIBIS in a nutshell:

At the corporate level, investment activity in Austria is strong. About 86% of Austrian firms invested in 2017. According to the self-assessment of the surveyed companies, Austrian firms rank at the top in the EU in terms of the high energy efficiency of their corporate building stock and state-of-the-art machinery and equipment. Furthermore, R&D and innovation is high on the agenda. 12% of Austrian firms can be classified as leading innovators. These companies spend actively on R&D and develop products new to the country and to the global market. In terms of the share of leading innovators, Austria ranks among the best in the EU. In addition, Austria hosts 7.8% of incremental innovators, which develop products new to the company and report substantial R&D expenditures. Most innovation in Austria is concentrated among medium-sized and large firms.

At the local authority level, Austrian municipalities assess the quality of their infrastructure as better than the EU average and also report smaller investment gaps than the EU average. The main obstacles to infrastructure investment at the municipal level, according to the EIB Investment Survey, relate to budgetary, political and regulatory instability and technical capacity.