Austria's conservative-led government approved a fresh stimulus package on Tuesday that it said boosts the sum of its coronavirus-related economic measures to some 50 billion euros ($56 billion) and will further swell its debt pile.
The new package consists of measures that were largely announced over the weekend, including a one-off top-up payment to unemployment benefits of 450 euros spread over three months, cutting the lowest income tax bracket to 20 percent from 25 percent, and a tax break for company investments of up to 14 percent.
Austria's Fresh Stimulus Package
It comes on top of 38 billion euros, or about 9.5 percent of last year's economic output, in aid for companies and workers first announced in March. After conflicting totals for the new package were announced, Chancellor Sebastian Kurz said it amounted to roughly 12 billion euros.
"We are returning towards normality faster than many other countries but it is still necessary to provide help...and to provide stimulus for growth so that the economy can bounce back as soon as possible," Kurz told a news conference. Tuesday's package comprises 5.2 billion euros in tax relief and a 6.3 billion euro "investment package" including the investment tax break. Another 7.5 billion in new aid for firms, like reduced value-added tax for restaurants, appeared to be folded into the original 38-billion aid package.
Austria was quick to introduce a lockdown against coronavirus contagion in mid-March and began loosening it a month later. Shops, bars, restaurants and schools have all since reopened while new infections have remained low at well under 100 a day. There have been 17,101 cases and 681 deaths so far. Still, its central bank predicts gross domestic product will shrink 7.2 percent this year even without a second coronavirus wave. Kurz said he expected the debt-to-GDP ratio to rise above 90 percent from around 70 percent last year.