Far right gets shut out as Austrian government forms

 

Far right gets shut out as Austrian government forms

 

Conservatives will lead Vienna’s new coalition amid economic uncertainty and political fragmentation.

 

February 27, 2025 9:46 am CET

By Chris Lunday

https://www.politico.eu/article/austria-coalition-forms-prevents-far-right-power/

 

Austria’s conservative Peoples’ Party (ÖVP), center-left Social Democrats (SPÖ) and liberal Neos have reached a coalition agreement after five months of political deadlock, according to multiple local media reports.

 

The deal, which still requires approval from the Neos party base, prevents the far-right Freedom Party (FPÖ) from taking power — even though it won the most votes in last September’s election.

 

Conservative boss Christian Stocker will become chancellor, with the SPÖ’s Andreas Babler as vice chancellor.

 

The coalition pact follows the failure of FPÖ chief Herbert Kickl to form a government due to policy differences with the ÖVP.

 

Austrian President Alexander Van der Bellen ultimately urged the country’s mainstream parties to find common ground as economic concerns grew.

 

The coalition’s proposed agenda, which was presented Thursday morning, includes budget consolidation and social reforms and aims to balance conservative and progressive policies.

 

The deal comes after a tumultuous five months in Austrian politics, during which the budget dispute nearly torpedoed coalition talks twice. Initially, negotiations between the ÖVP, SPÖ, and Neos collapsed in early January over deep disagreements on fiscal policy — primarily budget consolidation measures and tax reforms.

 

The breakdown pushed then-Chancellor Karl Nehammer to resign, triggering a power vacuum that ultimately led the ÖVP to shift toward negotiations with the far-right FPÖ.

 

That alliance, however, proved equally unworkable. Kickl’s demands for sweeping tax cuts, an expansion of Austria’s debt and restrictions on EU fiscal policies clashed with the pro-European ÖVP. Talks had unraveled by mid-February, forcing Stocker to return to the original three-party formula.

 

The result is a budget compromise in the coalition agreement that attempts to balance fiscal consolidation with investment in social welfare and economic growth.

 

At the heart of the 211-page agreement is a seven-year budget consolidation plan designed to bring Austria back in line with EU fiscal rules and avoid an excessive deficit procedure. The new government has committed to cutting spending by over €6.3 billion in 2025 and €8.7 billion in 2026, while implementing targeted tax relief for middle-income earners and businesses.

 

However, not all parties got what they wanted. The SPÖ had pushed for higher corporate taxes and a financial transactions levy, which the ÖVP and Neos rejected. In turn, the ÖVP’s proposal for stricter spending caps and a faster return to a balanced budget was watered down to accommodate the SPÖ’s demands for increased social spending.

 

The coalition’s migration policy reflects a shift away from the FPÖ’s attempt to secure a hard-line agenda in earlier coalition talks, in which it had called for a drastic reduction in asylum applications, an end to automatic citizenship for second-generation immigrants, and expanded border controls. Instead, the new government will maintain strict deportation procedures while expanding integration programs.

 

This marks a notable break from the ÖVP’s recent rhetoric. During its short-lived negotiations with the FPÖ, the conservatives had signaled openness to more hard-line migration restrictions, including stricter welfare access for asylum seekers. That pivot has now been abandoned in favor of a compromise approach that combines security with integration.

 

On the international stage, the new government has reaffirmed Austria’s commitment to Ukraine, its backing for EU-wide sanctions against Russia, and the provision of financial and logistical support for Kyiv’s reconstruction efforts.

 

However, Vienna will maintain its long-standing neutrality and its opposition to NATO membership despite growing European pressure for deeper security cooperation. The coalition agreement instead focuses on expanding Austria’s participation in EU-led defense initiatives, particularly in cybersecurity and intelligence-sharing.

 

Meanwhile, the government remains committed to EU enlargement in the Western Balkans — a policy designed to curb migration and the influence of Russia and China in the region.

 

This story has been updated.