How did the power balance change betwee Austria and Prussia change after the Treaty of Olmutz?
The Treaty of Olmutz, also known as the Punctation of Olmutz, resulted in the revival of the old German Confederation under the leadership of Austria, and the abandonment by Prussia as the leader of the proposed but then defunct Erfurt Union. Had the Erfurt Union come to fruition, Prussia would have been the dominant German state; however with the collapse of the Union and the signing of the Punctation, Austria became the leading German state. The treaty was considered a complete capitulation by Prussia to Austria, so much so that the Treaty became known as the "Humiliation of Olmutz." Needless to say, Austria's success was shortlived; Prussia under Otto von Bismarck soon united the German states under Prussian leadership to the exclusion of Austria.
The Treaty of Olmutz (better known as the Punctuation of Olmutz) was signed in 1850. The signing of this treaty led to Austria having more power relative to Prussia. The signing of the treaty is seen as a major humiliation for Prussia.
After 1848, the German Confederation had fallen apart. Prussia wanted to create a new confederation in which it would have more power than it previously had. Austria did not like this idea at all. They strongly opposed the idea and steps towards war were taken by both sides. Eventually Prussia backed down and signed this treaty in which they accepted the recreation of the German Confederation with Austria as the major power.