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.
Wenzel Anton, Prince of Kaunitz-Rietberg
Thus began the Seven Years' War in Europe, which ultimately failed to bring the lost provinces back to Austria. On 29 August 1756, King Frederick's Prussian Army invaded the Electorate of Saxony in a preemptive strike; they rolled over the Saxon forces and occupied Dresden. While the Austrian allies were not able to reach agreement on joint action, the politico-military situation remained inconlusive. Kaunitz urged for the replacement of the hesitant field marshal Count Leopold Joseph von Daun by Ernst Gideon von Laudon, however, a decisive victory was not achieved.