Austrian Chancellor Karl Nehammer decided to step down after attempts to form a new government fell apart for the second time. The People's Party, which Nehammer leads, ended negotiations with the Social Democrats, blaming "destructive forces" within the Social Democratic Party for the failure. The main dispute centered around addressing the country's significant budget deficit. Social Democratic leader Andreas Babler expressed regret over the decision and offered to continue talks.

Austria faces a significant challenge to reduce its budget deficit, which stands at 3. 7% of Gross Domestic Product (GDP), above the European Union’s limit of 3%. The next government also needs to tackle a recession lasting two years and rising unemployment. The People’s Party and the Social Democrats together hold a narrow majority in parliament, adding complexity to the formation of a new government.

The People’s Party will now look for a new leader, with a meeting planned for Sunday. Coalition talks, initiated in October by the president after other parties declined to work with the far-right Freedom Party, had been ongoing. The Freedom Party, led by Herbert Kickl, has seen a rise in support according to recent polls. Kickl criticized Nehammer, Babler, and President Alexander Van der Bellen for creating "chaos instead of stability. " Van der Bellen is expected to make a public statement soon.

Austrian Political Impasse: Nehammer Steps Down as Coalition Talks Fail

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