The announcement came as the People’s Party and the Social Democrats resumed coalition talks a day after the surprise withdrawal of the liberal Neos party from discussions.
“Unfortunately, I have to tell you today that the negotiations have ended and will not be continued by the People’s Party,” said Austrian Chancellor Karl Nehhammer of the conservative People’s Party. said in a statement on social media.
He said that “destructive forces” in the Social Democratic Party had “taken the upper hand” and that the People’s Party would not sign a program that was against economic competitiveness.
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Social Democrat leader Andreas Babler said he regretted the People’s Party’s decision to end the talks. “This is not a good decision for our country,” he said.
Babler said one of the main stumbling blocks was how to fix the “record deficit” left by the previous government.
“I suggested to Karl Nehammer and the People’s Party that the negotiations continue and I urged them not to,” he told reporters on Saturday evening.
The next government in Austria faces the challenge of saving between 18 and 24 billion euros, according to the European Commission. In addition, Austria has been in recession for the past two years, is experiencing rising unemployment and its budget deficit is currently 3.7% of gross domestic product – above the EU limit of 3%.
Talks have dragged on since Austria’s president tasked the conservative chancellor with forming a new government in October. The request came after all other parties refused to work with the leader of far-right Freedom Party, which won national elections in September for the first time with 29.2% of the vote.
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