The Austrian Chancellor says he will resign after talks to form a new government failed

Austrian Chancellor Karl Nehammer said on Saturday that he would resign in the coming days after talks to form a new government failed for the second time.

The announcement came after the People’s Party and the Social Democrats resumed coalition talks a day after the liberal Neos withdrew from the talks.

“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 Nehammer of the Conservative’s Party in a statement released on social media.

He said that the “destructive forces” in the Social Democratic Party had “gained power” and that the People’s Party would not sign on to the plan against economic competition.

Social Democratic leader Andreas Babler said he regrets the People’s Party’s decision to end the negotiations. “This is not a good decision for our country,” he said.

Babler said one of the main stumbling blocks is related to how to fix the “record deficit” left by the previous government.

“I asked Karl Nehammer and the People’s Party to continue the negotiations and I asked them not to stand up,” he told reporters on Saturday evening.

The next government in Austria faces the challenge of having to save between 18 and 24 billion euros, according to the EU Commission. In addition, Austria has been in the grip of recession for the past two years, is facing rising unemployment and the budget deficit is currently at 3.7% of Gross Domestic Product – above the EU limit of 3%.

Talks have been dragging on since Austria’s president appointed a conservative chancellor in October to form a new government. This request came after all other parties refused to cooperate with the party leader The Freedom Party, which won the national election in September for the first time with 29.2% of the votes.