Austro-Italian ironclad arms race
Seizing upon the decline of the Regia Marina in the years immediately after the Battle of Lissa, Tegetthoff worked to continue the efforts of Archduke Ferdinand Max of expanding the ironclad fleet of the now Austro-Hungarian Navy. Tegetthoff found political allies in the Austro-Hungarian Minister of War Carl von Franck and retired Admiral Bernhard von Wüllerstorf-Urbair. Wüllerstorf's and Franck's primary arguments in favor of continuing with the ironclad program Austria had engaged in prior to the Seven Weeks War lay largely along economic grounds. The two believed that constructing new ironclad warships would rejuvenate Austria-Hungary's economy following the defeat at the hands of Prussia and Italy, and that such a fleet would help to open up new commercial opportunities in the Levant and the Middle East. These proposals would be shelved however while Austria continued to reel from the military defeats inflicted by Prussia, and several cabinet reshufflings by Emperor Franz Joseph I resulted in a government more interested in pursuing revenge against Prussia than constructing new ironclads, which would be of little use in a hypothetical second war with Prussia.
Seven Years' War
Not only that, Austria now found herself estranged with the new developments within the empire itself. Beside the rise of Prussia, Augustus III, although ineffective, could muster an army not only from Saxony, but also Poland, since he was also the King of Poland as well as Elector of Saxony. Bavaria's growing power and independence was also apparent as it asserted more control on the deployment of its army, and managed to disengage from the war at its own will. Most importantly, with the now belligerent Hanover united personally under George III of Great Britain, It amassed a considerable power, and even brought Britain in, on future conflicts. This power dynamic was important to the future and the latter conflicts of the "Reich". The war also proved that Maria Theresa's reforms were still insufficient to compete with Prussia: unlike its enemy, the Austrians were almost bankrupt at the end of war. Hence, she dedicated the next two decades to the consolidation of her administration.