With this alliance, the centrist parties prevented the far-right, pro-Russian Freedom Party (FPÖ) from coming to power despite it winning the most votes in the election.
Initial negotiations between the ÖVP, SPÖ and Neos attempted to form a government and halt the far right. However, those talks collapsed in early January over deep disagreements on fiscal policy.
Consequently, far-right leader Herbert Kickl received a mandate from the president to form a government.
Kickl hoped to govern with the ÖVP, but the conservatives had little appetite for being a junior partner to the FPÖ, as Kickl’s demands for sweeping tax cuts, an expansion of Austria’s debt and restrictions on EU fiscal policy clashed with the pro-European ÖVP’s policies.
Those talks broke down in mid-February, forcing conservative party leader Stocker to return to the original three-party formula.
The resulting coalition agreement involves a budget compromise that attempts to balance fiscal consolidation with investment in social welfare and economic growth.
