VIENNA — Chancellor Karl Nehammer of Austria announced on Saturday his decision to resign in the near future following the failure of coalition talks aimed at forming a new government for the second consecutive time.

This announcement came after discussions involving the People’s Party and the Social Democrats concluded on Saturday, just a day after the unexpected withdrawal of the liberal Neos party from the negotiations.

Nehammer, who leads the conservative People’s Party, conveyed in a social media statement, “Regrettably, I must inform you today that the negotiations have concluded and will not be continued by our party.” He further remarked that “destructive forces” within the Social Democratic Party have taken precedence, and the People’s Party refuses to align itself with a program that undermines economic competitiveness.

Andreas Babler, the head of the Social Democratic Party, expressed disappointment over the People’s Party’s choice to terminate the talks. He noted, “This decision does not bode well for our country.” Babler mentioned that one of the crucial issues was the approach to address the “record deficit” left by the prior administration.

He urged Nehammer and the People’s Party to reconsider, stating, “I have offered to continue our discussions and implore them not to abandon this effort.”

The upcoming administration in Austria is tasked with the significant challenge of cutting between 18 and 24 billion euros, as outlined by the EU Commission. Concurrently, Austria has been grappling with a recession for two years, increasing unemployment rates, and a budget deficit currently at 3.7% of its Gross Domestic Product — surpassing the EU’s limit of 3%.
Babler attributed the breakdown of negotiations to “forces within the People’s Party” opposing collaboration with the Social Democrats, while acknowledging Nehammer’s willingness to compromise.

The potential coalition between the People’s Party and Social Democrats appeared tenuous from the outset, as together they held only a slim one-seat majority in the Austrian Parliament.

It remains uncertain what the next steps will be.

The People’s Party must now seek a successor for Nehammer, who has consistently opposed any coalition with far-right leader Herbert Kickl. However, with Nehammer’s impending departure, the party may reconsider its strategy under new leadership.

Officials from the People’s Party are scheduled to convene on Sunday to deliberate on selecting a new leader.

The People’s Party and the far-right Freedom Party align closely on economic matters, as well as issues like migration, and they are currently collaborating in five local coalitions.
An early election is a possible avenue, but based on Austria’s election regulations, it is unlikely to occur before May.

Coalition discussions have lingered since Austria’s president assigned the conservative chancellor in October the task of forming a new administration. This directive came after other political parties declined to partner with the far-right Freedom Party, which achieved a national election victory in September with 29.2% of the vote.

Recent opinion polls released in December indicate that the Freedom Party’s support has surged to between 35% and 37%.

In a written statement on Saturday evening, Freedom Party leader Herbert Kickl criticized Nehammer, Babler, and Austria’s President Alexander Van der Bellen for generating “chaos instead of stability,” adding that it is now up to Van der Bellen to respond.

Van der Bellen is expected to issue a statement soon, as reported by Austria’s public broadcaster ORF.