AUSTRIA: FPÖ-ÖVP Coalition Talks Continue Despite Reports Of A Halt
Coalition talks between the far-right Freedom Party of Austria (FPÖ) and the conservative Austrian People's Party (ÖVP) continue this morning despite reports on the night of 4 Feb that discussions had completely halted. ÖVP lawmaker Wolfgang Hattmannsdorfer said in an interview that the prospect of talks succeeding was 'fifty-fifty'.
- After discussions between FPÖ leader Herbert Kickl and ÖVP head Christian Stocker on 4 Feb, the ÖVP convened a party executive committee at short notice. Reports suggested that this indicated trouble in talks, but the FPÖ posted on X that the meeting was routine and talks will continue.
- Der Standard reports that the division of ministries between the two parties remains a source of friction. The FPÖ is said to be demanding the powerful Finance Ministry, as well as the Interior Ministry (in charge of immigration policy), offices the ÖVP is reluctant to release.
- The report also suggests there is disagreement on dealing with the EU, an area where the two parties have stark differences, particularly regarding sanctions on Russia. The FPÖ is seen to want to keep areas of EU affairs under the control of the federal chancellery, and has offered the ÖVP control of the justice and defence departments in exchange.
- The parties had indicated they would announce an agreement this week, but that is no longer guaranteed. There is the prospect a new gov't is sworn in without all details yet being agreed upon- although this of course creates risk of collapse and disagreement in the future.
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CANADA: Betting Markets Shift To 95% Probability Of Imminent PM Resignation
Following earlier headlines in the domestic press claiming that PM Justin Trudeau could resign/announce his resignation as soon as 7 Jan (see 'CANADA: Trudeau Increasingly Likely To Announce Exit This Week-Globe&Mail', 0725GMT), betting markets have shifted significantly. Data from Polymarket shows political bettors assigning a 95% implied probability that Trudeau will announce his resignation before February, while data from Kalshi shows bettors assigning the same 95% implied probability that Trudeau will resign before April. Prior to the publication of the speculation on 5 Jan, the implied probability of an immediate resignation stood around 50%.
- There has been a flurry of media stories claiming that former BoC and BoE governor Mark Carney could launch a bid for the leadership of Trudeau's centre-left Liberal Party of Canada (LPC). CTV News reports "Since Boxing Day, sources say Carney has made and fielded dozens of calls to Liberal MPs and political organizers who view him as a potential replacement for Trudeau."
- Finance Minister Dominic LeBlanc, a close ally of Trudeau, is seen as a potential interim PM if Trudeau goes immediately. Alternatively, he may seek the LPC leadership. Former Finance Minister Chrystia Freeland, whose resignation in December sent shockwaves through Canadian politics, is another likely runner.
- With the Trudeau gov't currently a minority administration, it remains to be seen whether a new Liberal leader would seek to maintain the current situation or risk a snap election with the LPC trailing Pierre Poilievre's centre-right Conservatives by a double-digit margin in opinion polling.
Chart 1. Betting Market Implied Probability PM Trudeau Announces Resignation Before February, %
Source: Polymarket
MNI: EUROZONE FINAL DEC COMPOSITE PMI 49.6 (FLASH 49.5); NOV 48.3
- MNI: EUROZONE FINAL DEC COMPOSITE PMI 49.6 (FLASH 49.5); NOV 48.3
- MNI: EUROZONE FINAL DEC SRVICES PMI 51.6 (FLASH 51.4); NOV 49.5
