Austro-Italian ironclad arms race
Austria's defeat in the Seven Weeks War forced Austria to determine a new set of foreign and domestic policies for the future, as Austria's interests since the days of the Holy Roman Empire had primarily been found in Italy and Germany. The Empire thus reformed itself into the Austria-Hungarian Empire following the adoption of the Austro-Hungarian Compromise of 1867 (German: "Ausgleich"), which re-established the sovereignty of the Kingdom of Hungary and placed Hungarians within the Empire on an equal footing with Austrians. Under the "Ausgleich", Emperor Franz Joseph I would be crowned as King of Hungary, while a separate parliament at Pest with powers to enact laws for the lands of the Holy Crown of Hungary would be established.
Seven Years' War
In the attempt to satisfy Austria at the time, Britain gave their electoral vote in Hanover for the candidacy of Maria Theresa's son, Joseph II, as the Holy Roman Emperor, much to the dismay of Frederick and Prussia. Not only that, Britain would soon join the Austro-Russian alliance, but complications arose. Britain's basic framework for the alliance itself was to protect Hanover's interests against France. At the same time, Kaunitz kept approaching the French in the hope of establishing just such an alliance with Austria. Not only that, France had no intention to ally with Russia, who, years earlier, had meddled in France's affairs during Austria's succession war. France also saw the dismemberment of Prussia as threatening to the stability of Central Europe.