Austria’s political scene felt some tremors in the past few weeks following snap elections. Unsurprisingly, potential coalitions became a primary subject of discussion. “The Conservatives won in a landslide, with almost 38% of the vote, with Social Democrats taking a very distant second. with around 21%,” reports DLA Piper Country Managing Partner David Christian Bauer. Another notable result of the election is the low 16% vote for the far-right Freedom Party – the recent coalition partners of the conservatives – following insinuations of corruption. “The Conservatives will most certainly form the Government and any coalition that gets formed will have to go through them,” says Bauer, emphasizing that the Freedom Party will face strong challenges to return to rule, with the scandals and “internal turmoil they’re experiencing.”
While the Conservatives and the Greens – who obtained a 13% result – have significant differences and very little overlap in their ideas (although this coalition is still favored by many), Bauer thinks that what “could otherwise work is a Government formed of Conservatives and the Social Democrats - however, there is not a lot of love between them either.” He believes that such a Government would probably be very stable, but not very active, and that “few reforms, if any, would happen.” He says that a “minority coalition of the Conservatives with the left-liberal NEOS and supported in parliament by the Freedom Party might be an option as well.”
In terms of business Austria, Bauer says, is still “doing great.” Aside from the “automotive industry which is very regulated and under direct impact of the German automotive industry, most other sectors are strong,” he says, adding that a lot of business is done with companies from Asia and the US. “The tourism and services sectors are booming, but the banking sector is having a bit of a difficult time, especially because of the continued European Central Bank policy of negative interest rates.”
In another significant development, Bauer points to the recent recognition of the Vienna International Arbitral Centre by the Russian Government as “one out of just two foreign arbitration institutions.” Bauer describes this as a clear sign that the Russians have “a lot of trust in the Austrian legal system and political stability” and that it will lead to “CEE/CIS arbitration strengthening.”
Finally, Bauer says, the legal sector has seen some shake-ups. He reports that “a significant number of partners have left private practice and firms and moving over to the legal arm of Big 4 auditing companies.” According to him, “there is a significant demand for corporate housekeeping and this is a reflection of that - the Big 4 have recognized the need and, accordingly, started scooping people up.” He says that, recently, “a lot of partners from major firms have moved over to EY and KPMG - there is some palpable tension on the market.”
