AUSTRIA'S two largest political parties clinched a coalition deal yesterday, renewing their left right alliance for the 14th time since the second World War.
The Social Democrat (SPOe) Chancellor, Dr Franz Vranitzky, and conservative People's Party (OeVP) leader, Mr Wolfgang Schuessel, hailed the accord as a victory for common sense and compromise, but opposition groups vowed to fight the austerity budget at the heart of the deal.
"We have agreed on an enormous programme. The next government should and will last its full four year term", Dr Vranitzky said.
"This is good news for Austria", echoed Mr Schuessel, whose tough stand on the 1996 budget forced the collapse of the last SPOe OeVP coalition and triggered elections in December.
Parliament will rubber stamp the deal next Tuesday. The Finance Minister, Mr Viktor Klima, is scheduled to give his controversial budget speech just over a week later.
The SPOe and OeVP agreed on the two year cost cutting programme in February. It aims to reduce the projected budget deficit by 100 billion schillings (£6.13 billion) by the end of 1997 through a combination of spending cuts and tax increases.
Dr Vranitzky and Mr Schuessel presented a united front yesterday, three months after a bitterly fought election campaign.
They renewed their commitment to Europe and outlined plans to slim down central government by axing two ministers and three state secretaries. However, they neatly sidestepped the controversial issue of Austria's neutrality and fudged talk of a "coalition free" area.
A decision on neutrality was postponed until after the EU summit in Turin later this month and although a coalition free area was agreed in principle, details remained murky.
Opposition groups swiftly condemned the new government as more of the same".
Public sector employees, students and university professors have joined forces to protest against the budget deal, which was designed to put Austria back on track for reaching the Maastricht criteria for European Economic and Monetary Union.
Last week, single mothers dumped dirty nappies outside the social affairs ministry in protest against plans to cut maternity leave.