Divided But United - Austria 1836-1920
The March Revolution in Berlin
Right after the elections, the new Conservative government had to deal with a very sensitive affair. During the March revolution in Berlin, Christian, Duke of Augustenborg had proposed a Prussian intervention in the affair of Schleswig-Holstein. The Prussians saw this as an excellent opportunity to regain lost prestige and so Prussian troops marched into Holstein. Austria was asked to assist, which would look bad in the eyes of France and Britain.
Still, German brotherhood prevailed and the 1st Kavalleriekorps consisting of 1. and 2. Kavalleriedivisions was sent to support the Prussians.
The Austrians fought a total of four battles in the war against Holstein and Denmark. The 1st was the Battle of Schwerin, where the Austrian divisions defeated the Schleswig forces sieging the capital of Mecklenburg-Vorpommern.
The second and third battles were fought in the province of Ribe, where the Austrians attacked the Danes and succesfully defended against the Danish counter-attack. The fourth and final battle was the Battle of Odense. The Austrians faced superior numbers, but the cavalry divisions were elite units and their organization was far superior to the Danish recruits.
After these victories, Copenhagen was exposed. With the Austrians in Odense and the Prussian naval blockade preventing trade and food shipments, the Danes offered peace. The peace deal sealed the fate of Schleswig-Holstein, with Bremen annexing it completely. Austria had Aalborg and the Danish overseas possessions.
Otherwise year 1848, the "Year of Revolution" hardly touched Austria, while most of it's neighbours were struggling with uprisings. There were some seperatist rallies and riots in Northern Italy, but that was little compared to the ones the Sicilians were organizing in the southern part of the peninsula.
All in all, people seemed to be quite happy with the political system in Austria, which differed greatly from any of it's neighbours. Bavaria was the only one of the neighbouring states to embrace democracy. Most of the uprisings were crushed by force and authoritarian governments continued their rule.
On the diplomatic front, a defensive alliance with the Kingdom of the Two Sicilies was formed. Metternich wanted an ally in Italy, since Sardinia-Piedmonte was allied with France. If they would unify Italy, Austria would be surrounded by hostile neighbours. Austrian support to the Two Sicilies ensured that the Piedmonteans wouldn't try anything clever, at least for some years.
With the Conservatives in power, social reforms weren't really the number one priority. Instead, the Army was greatly expanded "so that the Empire can proudly say it can defend itself against any foe", as Metternich put it. That was hardly the reality, even though the Austrian military was comparatively large. The Empire had 18 standing divisions and a reserve of 42 divisions. Russia had double that amount and Prussia was considered more than capable of reaching Vienna, if it so chose.
Economically speaking, Austria was the fourth strongest nation in Europe, after Britain, France and Prussia. The rail network extended from northern Italy to Hungary and Slovakia. Austria was also the world's leading producer of coal, which guaranteed great revenues from foreign trade. A new cement factory was opened in Bohemia to open up jons for the quickly increasing population there.
Things seemed to go well for the Empire, and the Conservatives never tired of claiming the credit for this new age of prosperity. Time would tell how much it would last.