Austria is bracing for significant economic reforms as Wifo Director Gabriel Felbermayr emphasizes the need for swift and unpopular measures to address the country's growing budget deficit.

With the deficit projected to exceed 4% next year, Felbermayr suggests potential tax increases, including adjustments to the mineral oil tax and the abolition of diesel privileges, to stabilize the economy.

He also advocates for a gradual increase in the retirement age to 67 by 2044. Felbermayr stresses that merely raising taxes or cutting expenses won't suffice; a comprehensive reform agenda is essential to return Austria to a growth trajectory.

As political parties prepare for coalition talks, Felbermayr warns of the complexities involved, especially in multi-party coalitions, and urges a balanced approach to public sector wages.