After a week-long trip to China, Chancellor Christian Stocker has just returned to Vienna, and inevitably, political reporters are calling for the start of the announced “autumn of reforms.” The coalition of the ÖVP, SPÖ, and NEOS has set its sights on a great deal—from pensions to social welfare, health care, the economy, taxes, and even state reform. The cut to the university budget caused a stir and led to a few demonstrations, but calm has since been restored. The tight budget situation leaves the government with almost no room to hand out generous benefits.

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But there is also good news to report: Similar to Germany, economic growth picked up over the course of the year. There is even optimism for an even more positive trend next year.

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A hard line on the EU budget and immigration

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Chancellor Stocker is also fighting in Brussels against the draft budget presented by the European Commission. Vienna insists on a cut to the EU budget and is firmly opposed to any increase. Stocker has also repeatedly refused to rule out an Austrian veto. The ÖVP, which is generally pro-EU, is taking a hard line on this issue—as it is on immigration—in order to take as much wind out of the FPÖ’s sails as possible.

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The number of migrants arriving in Austria fell in 2026 to the level seen in the 1990s. As in many other EU countries, future developments in Austria remain dependent on international conflicts such as those involving Iran or Ukraine.

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A first in the history of the ÖVP

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The two state elections scheduled for next year in Tyrol and Upper Austria are already sending their first signals: Last Saturday, the Tyrolean ÖVP decided that there should be a separate ÖVP membership within the Tyrolean ÖVP that does not automatically entail membership in the federal ÖVP. This marks a first in the ÖVP’s party history.

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Both ÖVP state chapters are battling the FPÖ for first place in their respective state parliaments. According to polls, both races are fairly wide open. Following the loss of Styria, defeats in even just one of these two ÖVP strongholds would be a disaster for the ÖVP and could pave the way for upheaval in the party’s leadership.

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A look at the second coalition partner: There was great excitement this past summer when Gerhard Zeiler, an international media executive and SPÖ figurehead, publicly announced his intention to replace the unsuccessful SPÖ chairman, Andreas Babler.

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The battered SPÖ seeks a fresh start

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The media predicted months of open conflict between the various factions within the SPÖ and a likely collapse of the coalition at the federal level. But things turned out quite differently: The SPÖ—admittedly under heavy pressure from the party apparatus—came together and agreed to replace Andreas Babler as vice chancellor and, in the spring of 2027, as federal chairman of the SPÖ as well.

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The new star is the popular Finance Minister Markus Marterbauer. Although he had been battling cancer until recently, he has now returned, having recovered. He is currently working on a reshuffle of the SPÖ’s government team. Vice Chancellor Babler’s departure is considered a certainty.

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It is entirely possible that there will be a major cabinet reshuffle. The removal of one ÖVP and one SPÖ state secretary could signal that the federal government intends to cut costs. Whether the battered SPÖ will succeed in making a fresh start under Marterbauer remains to be seen, of course. In any case, many observers believe the party’s prospects are better than they have been in a long time.

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Successes of the third coalition partner

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The third coalition partner, NEOS, is doing quite well. Foreign Minister Beate Meinl-Reisinger can take credit for securing a seat on the UN Security Council, and Education Minister Christoph Wiederkehr has, after all, initiated and implemented a number of reforms in Austria’s outdated education system.

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The FPÖ is lying in wait, hoping the ruling parties will make mistakes. It remains to be seen whether that will be enough for a federal election victory in 2029. Should the party be able to continue its winning streak at the state level, a seismic shift within the ÖVP—with scenarios that could even lead to the return of former Chancellor Sebastian Kurz—cannot be ruled out. It also remains to be seen whether the SPÖ will be able to recover under its popular new Vice-Chancellor.

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The Greens are hoping to join future governments at both the state and federal levels. However, they have not succeeded in making a significant mark in the parliamentary opposition in recent years. Austria’s domestic politics remain exciting. In these extremely volatile times, anything seems possible.