Austria's Brexit Deal: Who Are Their Adversaries?

Austria and Germany have both expressed their desire to avoid a no-deal Brexit, with Austrian chancellor Sebastian Kurz stating that he and German chancellor Angela Merkel agreed on the importance of the UK not leaving the European Union without a trade deal. Kurz also said that a no-deal Brexit would be the worst decision of recent years. However, Austria's current coalition government, which includes the far-right, could be an unpredictable force in the Brexit negotiations. Experts predict that Austria will use its six-month EU presidency to exert pressure on its neighbours rather than to gain any special Brexit concessions.

Austria's far-right government could be an unpredictable force in Brexit negotiations

Austria's far-right Freedom Party (FPÖ) has emerged as the dominant political force in national elections, with 28.9% of the vote. This has major implications for democracy and political stability in the country, and it could also impact Brexit negotiations. The FPÖ has taken a hard-line stance on immigration, calling for the "remigration of uninvited foreigners" and seeking to bring back powers from the EU to Austria. This could put them at odds with the UK, which is seeking to negotiate a new relationship with the EU outside of the free movement of people agreement.

The FPÖ has also criticised Western military aid to Ukraine and called for an end to sanctions against Russia. This could create tension with the UK, which has been a strong supporter of Ukraine and a key player in imposing sanctions on Russia. The FPÖ's leader, Herbert Kickl, has even labelled European Commission President Ursula von der Leyen as a "warmonger".

Additionally, the FPÖ has a history of provoking and deliberately overstepping accepted boundaries. Kickl, for example, described Austrian President Alexander Van der Bellen as "senile", shocking the political establishment. He has also appeared to support conspiracy theories, such as advocating for the use of Ivermectin to treat COVID-19 despite it only being approved for treating parasitic worms in animals.

The FPÖ's rise to power is part of a larger right-wing wave sweeping through Europe, impacting countries such as Italy and the Netherlands. This shift could have significant implications for Brexit negotiations, as the EU may become more influenced by far-right priorities on migration, climate, and Ukraine.

Austria's car industry is vulnerable to the effects of Brexit

Austria's car industry is not immune to the broader economic implications of Brexit. A decline in the value of the pound could make Austrian vehicles less affordable for UK buyers, potentially leading to a decrease in demand. Moreover, if Brexit results in economic downturns or recessions in the UK or other European countries, it could have a ripple effect on Austria's car industry, reducing sales and affecting production decisions.

The impact of Brexit on the automotive industry as a whole cannot be understated. Car manufacturers in Austria may find themselves contending with shifting supply chains, altered production strategies, and changing consumer behaviours. The industry's vulnerability extends beyond tariffs and border issues, as the broader economic landscape is reshaped by this pivotal event.

To mitigate the potential negative consequences, Austrian car manufacturers may need to adapt their business models, supply chains, and go-to-market strategies. Diversifying their customer base and seeking opportunities in non-EU markets could be one approach. Additionally, investing in local sourcing of parts and components, as well as exploring alternative manufacturing locations, may become necessary to remain competitive.

The full extent of Brexit's impact on Austria's car industry will only become clear in the months and years following the UK's departure from the EU. However, it is evident that the industry is vulnerable to disruptions in trade, economic fluctuations, and changes in consumer behaviour brought about by this historic event.

Alpine states like Salzburg, where tourism is key, could feel a heavy Brexit burden

The United Kingdom left the European Union on January 31, 2020, with the withdrawal agreement coming into force on February 1, 2020.

Brexit's impact is expected to be felt across several key Austrian regions and sectors, including manufacturing, tourism, and the automotive industry. While some sectors may benefit, Alpine states like Salzburg, where tourism is a key industry, could feel a heavy Brexit burden.

Nearly one million British tourists, mainly winter ski tourists, visit Austria each year, making up the fourth-largest visiting national group in terms of overnight stays. The loss of these tourists could significantly impact the local economy. Barbara Kolm, director of the Austrian Economics Institute, emphasised the substantial scale of tourism in the Alpine regions during the winter months, stating that it "must not be neglected."

The impact of Brexit on tourism in Austria is a concern that has led to the creation of lobby groups, such as Seasonal Businesses in Travel (SBIT), which comprises over 100 British tour operators. SBIT aims to raise awareness of the potential impact of Brexit on the UK outgoing travel industry by lobbying governments in the UK and Europe.

While the full effects of Brexit on Alpine states like Salzburg remain to be seen, the loss of British tourists could indeed place a heavy burden on the region's tourism-dependent economy.

Austria and Germany will try to avoid a no-deal Brexit

Austria and Germany have expressed their desire to avoid a no-deal Brexit. In 2018, Austrian Chancellor Sebastian Kurz stated that he and German Chancellor Angela Merkel shared the view that a no-deal Brexit must be avoided. Kurz emphasised the importance of maintaining good relations between the UK and Europe, despite his negative view of Brexit. Merkel also acknowledged the possibility of a deal, but asserted that Germany would accept a no-deal outcome if the UK did not compromise on ensuring fair competition between British and EU companies.

The United Kingdom officially left the European Union on January 31, 2020, with the withdrawal agreement coming into force on February 1, 2020. This marked the beginning of a transition period during which the UK and EU negotiated the terms of their future relationship.

In the lead-up to Brexit, European leaders, including Chancellor Kurz, emphasised the need to prevent a hard Brexit. Kurz described the UK's vote to leave the EU as "probably the worst decision of recent years". Despite his opposition to Brexit, Kurz recognised the need to respect the democratic decision of the British people and focus on maintaining a positive relationship between the UK and the EU.

During negotiations, the main sticking point preventing a withdrawal agreement was the Irish border. The EU proposed a backstop plan that would keep Northern Ireland in the customs union, but Theresa May, the British Prime Minister at the time, rejected this idea as an unacceptable loss of sovereignty for Britain.

Ultimately, the EU and the UK reached a final agreement, the Trade and Cooperation Agreement, on December 24, 2020, avoiding a no-deal Brexit. The agreement came into force provisionally on January 1, 2021, providing a framework for future cooperation between the two parties.

Austria's relationship with the EU could serve as an example of how the UK's relationship with the EU can be disentangled

Austria's journey towards EU membership began in the context of its post-World War II recovery and consolidation. The country received assistance and funding from organisations like the United Nations Relief and Rehabilitation Administration (UNRRA) and the European Recovery Program (ERP), which contributed to its economic reconstruction. During this period, Austria also pursued a policy of neutrality, which was interpreted by some as a "detour on the way to Europe." Despite this, Austria actively participated in organisations like the Organisation for European Economic Cooperation (OEEC) and sought arrangements with European communities, such as the European Coal and Steel Community (ECSC).

In the following decades, Austria's integration policy was influenced by various factors, including its trade relations with Eastern European countries, domestic political resistance, and the dynamics between member states within the EU. Austria's efforts towards integration were not always smooth, and there were times when negotiations were blocked or stalled. However, Austria's commitment to the process eventually led to its successful accession to the EU in 1995, following a referendum with overwhelming public support.

The UK's withdrawal from the EU, or Brexit, presents a different set of challenges. While Austria's path was one of gradual integration, the UK now finds itself in a position of disentangling its relationship with the bloc. However, there are still lessons to be learned from Austria's experience.

Firstly, the UK can expect a lengthy and complex process. Austria's accession negotiations took almost six years, and the UK's withdrawal is likely to be equally, if not more, intricate. Secondly, the UK should recognise the importance of addressing domestic concerns and achieving broad societal support. Austria's integration efforts were bolstered by public sentiment, and the UK may need to focus on addressing the concerns of its citizens to build consensus around its new relationship with the EU.

Additionally, the UK can anticipate ongoing interactions and negotiations with the EU, even after Brexit. The UK and the EU have established committees and councils to oversee the implementation of agreements and resolve disputes. These structures resemble the committees and councils that Austria participated in as an EU member state, demonstrating the ongoing need for cooperation and dialogue.

In conclusion, while Austria's path to EU membership and the UK's departure from the bloc are distinct processes, there are valuable lessons to be drawn from Austria's experience. By understanding the complexities of integration, addressing domestic concerns, and maintaining open channels of communication, the UK can navigate its post-Brexit relationship with the EU in a constructive manner.

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