Austria Installs New Cabinet in Shadow of Recession, Far Right
(Bloomberg) -- More than five months after elections, Austria appointed a conservative-led government entrusted with pulling the economy out of recession while cutting the budget deficit and reversing a surge in right-wing populism.
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People's Party Chancellor Christian Stocker will lead a coalition that includes the Social Democrats and liberal NEOS as junior partners. Austria's long history of consensual rule was underscored last month, when the Freedom Party failed to form a government because it couldn't strike a compromise on its radical policy agenda.
Germany's ill-fated three-way coalition — voted out of office a week ago — underscores the threat now facing its southern neighbor, whose fragile compromise cabinet now has to contend with an economy characterized by rising political risk.
'For the sake of the country, they've overcome their reservations,' President Van der Bellen said Monday, urging the new government to pay particular attention to economic stability and social cohesion.
Christian Stocker, 64, has emerged as an unlikely Chancellor. Previously a party secretary and long-serving deputy mayor of a small city south of Vienna, he replaced Karl Nehammer as People's Party leader in January to break a negotiation deadlock
Stocker's immediate job will be to implement a €6.3 billion ($6.6 billion) budget savings program that cuts the deficit to the European Union's limit of 3% of gross domestic product. A plan already presented by the government will taper public payments and raise bank taxes.
The Social Democrat's Markus Marterbauer, the former top economist at the Chamber of Labour, was appointed to plot the recovery as Austria's finance minister. His research has focused on post-Keynesian economics and income distribution.
Economic output fell by 0.4% in the fourth quarter of 2024, the eighth straight quarter of contraction, Statistik Austria said Monday.
NEOS party chief Beate Meinl-Reisinger will steer the Foreign Ministry.
The three parties will need to reestablish Austria's place in a turbulent geopolitical era. The country's neutrality - the last nation among continental EU members to shun military alliances - has broad public support, but is increasingly at odds with the risk posed by Russian expansionism and President Donald Trump's recalibration of US foreign policy.
The government has pledged to buy new fighter jets and raise defense spending to 2% of economic output by 2032.
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