Moody’s has confirmed Austria’s credit rating.
The influential rating agency said on Friday it decided not to lower the country’s rating from the best-possible grade of AAA. Moody’s added that it did not touch the Austrian economy’s outlook either. The rating agency explained Austria’s economy was doing well thanks to its muscular export industry.
Moody’s also praised the government for trying to install a debt limit. Social Democrats (SPÖ) and the conservative People’s Party (ÖVP) want to add the debt brake to the constitution. However, one opposition party must support a draft bill to do so. Earlier this month, the debt brake became a regular law thanks to the coalition’s simple majority. A constitutional law would have a stronger impact on the current and future governments’ decisions.
Moody’s explained Austria also kept the triple-A because of its low unemployment rate and comparably high incomes of workers and employees. Around 218,200 Austrians had no job in September of this year, 4,000 more than in September 2010. Austria’s unemployment rate ranges around four per cent at the moment but is almost twice as high among people aged 25 and younger. Around one in 10 residents of the European Union (EU) are currently unemployed.
Moody’s said at the weekend the Austrian economy could be strongly affected by a worsening of the situation in the Eurozone but stressed that the same would apply to a whole number of members of the group of 17 EU states. SPÖ Chancellor Werner Faymann announced on Saturday Moody’s AAA confirmation was proof that the government was right with the various stabilisation measures it had set since 2008.
Representatives of the opposition – the Greens, the Freedom Party (FPÖ) and the Alliance for the Future of Austria (BZÖ) – said Moody’s announcement did not solve any of Austria’s problems. ÖVP Finance Minister Maria Fekter, who recently caused a stir by suggesting that young teachers should work more, called Moody’s confirmation as the “first step” of the government’s debt reduction strategy. Fekter is currently holding talks with SPÖ Finance Secretary Andreas Schieder and SPÖ Media Secretary Josef Ostermayer about where cuts could be made in the coming years. ÖVP whip Karlheinz Kopf is determined to get the green light for a debt limit in the constitution from FPÖ chief Heinz-Christian Strache.
Meanwhile, the Labour Chamber (AK) and the Federal Trade Union (ÖGB) called for a tax on financial transactions and higher taxes on assets. The SPÖ-dominated institutions warned about setting up measures which would affect the working class and members of the middle class. They pointed out that higher unemployment meant more costs for the state and appealed to the government to reduce the tax burden on labour.
Asked whether he approved an “eat the rich” policy considering new and higher taxes, SPÖ Vienna Mayor Michael Häupl said today (Tues) it was important to ensure “social peace” in Austria. Häupl told the Kurier it was a “fact” that the gap between the poor and the rich was widening. He said those who had more than others had to contribute in the upcoming budget restoration. The federal SPÖ-ÖVP coalition plans to present its austerity package within the coming three months and hold a ballot on it in parliament on 1 April.