Austria will continue to be governed by a grand coalition of its two major parties after those groups agreed to share power at a meeting Sunday.

SPÖ leader Werner Faymann and ÖVP leader Josef Pröll announced agreement on the formation of another grand coalition on Sunday.

The question is whether it will be any more successful than its predecessor, which became bogged down in constant infighting which hindered it's ability to serve Austria.

The challenges facing the next grand coalition are much greater than those the outgoing government confronted.

The new coalition will have to deal with the impact of the global financial crisis, which includes rising unemployment, lower economic growth and possible recession, lower availability of credit and fewer exports.

Pröll (photo), the future vice-chancellor, will become finance minister.

Perhaps the greatest challenge facing the new coalition will be to raise consumer purchasing power as one of the best means of stimulating economic growth.

The new government may also find it difficult to coordinate measures to deal with the crisis with the European Commission and the other 26 EU member states.

Dealing with the crisis, however, will not be the only problem afflicting the new government.

As was the case with its predecessor, intra-party infighting in both the SPÖ and the ÖVP may make it difficult for the two parties to agree on a number of measures.

The SP? has agreed to give such important ministries as finance, interior and justice to the ÖVP.

Fear of backfiring

That could backfire on the SPÖ as it did two years ago, when it put outgoing SPÖ Chancellor Alfred Gusenbauer on the defensive for the remainder of his term in office.

Many ÖVP provincial grandees opposed former party leader Wilhelm Molterer's decision last summer to opt for a snap general election and want the party to go into the opposition rather than to form another grand coalition.

A slight majority of Austrians supports the formation of another grand coalition, but public opinion could change rapidly if it proves to be a failure.

Faymann and Pröll are putting the best face possible on their prospects.

Good intentions

Faymann said: "We will do what we said we would do before the election. Pröll added: "We will not allow disagreement to paralyse our work."

The two party leaders reportedly worked well together as their parties' respective coalition coordinators in the outgoing government.

Cooperation in their present positions as leaders of both governing coalition parties however will be all the more challenging.