Gusenbauer to head new Austrian government 

Austrian Social Democrats (SPÖ) and the Conservative People's Party ÖVP agreed to form a coalition government. Gusenbauer is to take over the chancellery from Conservative Wolfgang Schüssel, who has ruled under the coalition between his People's Party and the far-right Freedom Party for the past six years.

The members of the new government are yet to be named. The cabinet will have 20 members. The ministries of the interior, finance and foreign affairs remain with the ÖVP, whereas the SPÖ takes on defence, justice, education and social affairs.

The Social Democrats face the difficult task of renegotiating the heavily disputed Eurofighter deal to acquire military jets from the European Aeronautic Defence and Space company EADS.

Gusenbauer told reporters: "If you look at the government programme you will see that Austria is one of the few countries in Europe where not only competitiveness but also social justice is at the top of the agenda."

Following the announcement, Schüssel said: "We want to invest in the future of our country and that is why the major part of our extra spending will go towards economic growth, job creation and education." He added: "We believe that these sectors are the motors of our future social development and wealth."

President of the Party of European Socialists Poul Nyrup Rasmussen said: "Alfred Gusenbauer is someone who has fought all his political career for better opportunities for ordinary people. He cares passionately about decent jobs, about good education, about quality public services."