CONTENT PREVIEW
Country Risk

Following Austrian early election, alliance between centre-right and right-wing most likely whilst political instability will remain high

15 October 2017
ÖVP-leader Sebastian Kurz speaks in Vienna at the party’s election event after initial results came in on 15 October. Source: Thomas Kronsteiner/Getty Images: 861706372

Key Points

  • Former foreign secretary Sebastian Kurz and his centre-right ÖVP came first in the latest general election with around 31%.
  • The centre-left SPÖ under current Chancellor Christian Kern came second while the right-wing FPÖ managed to increase its electoral share significantly, leaving it well-placed to enter the government as the junior coalition partner.
  • Regardless of the new government’s final composition, it is likely that the incoming administration will face elevated levels of internal instability and strong opposition pressure.
  • The European Union is likely to criticise a potential ÖVP-FPÖ alliance but is unlikely to repeat the sanctions imposed during their last period of joint governance in the early 2000s.
  • Austria’s domestic political instability is unlikely to damage the country’s business environment.

Event

The early election was triggered by the collapse of the centrist grand coalition between SPÖ and ÖVP in May 2017, forcing voting well before the scheduled end of the regular administrative term in 2018.

On 15 October, the centre-right Austrian People’s Party (Österreichische Volkspartei: ÖVP) led by Austria’s former Foreign Secretary Sebastian Kurz came first in an early election with 31.6% in provisional results at the time of writing, gaining 7.6% vis-à-vis the last general election in 2013. Under the leadership of current Chancellor Christian Kern, the centre-left Social Democratic Party of Austria (Sozialdemokratische Partei Österreichs: SPÖ) lost its position as Austria’s largest party, but managed to improve its electoral share by 0.1% to 26.9%. The right-wing, anti-immigration Austrian Freedom Party (Freiheitliche Partei Österreichs: FPÖ) managed to secure its best federal-level result in history with 26%, gaining 5.5%. This outcome is likely to leave the FPÖ as kingmaker for the new administrative term: the party is well-placed to enter government as the junior coalition partner.

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