Austrian chancellor announces resignation after failed coalition talks

On January 4, Austrian Chancellor Karl Nehammer announced that he would resign in the coming days after negotiations to form a new government broke down for the second time.

The talks, which had been ongoing between Nehammer’s conservative People’s Party and the Social Democrats, were further complicated by the unexpected withdrawal of the liberal Neos party, Caliber.Az reports, citing American media.

In a statement shared on social media, Nehammer confirmed that the People’s Party would no longer continue with coalition talks.

“Unfortunately, I have to tell you today that the negotiations have ended and will not be continued by the People’s Party,” he said. The chancellor pointed to “destructive forces” within the Social Democratic Party, claiming they had gained the upper hand and that the People’s Party could not sign on to a program that undermined economic competitiveness.

The Social Democrats expressed disappointment over the decision. Party leader Andreas Babler regretted the collapse of negotiations, calling it “not a good decision for our country.”

Babler added that the inability to reach an agreement centred around how to address Austria’s financial challenges, including the "record deficit" left by the previous government. He urged Nehammer to continue negotiations, saying, "I have offered to Karl Nehammer and the People’s Party to continue negotiating and called on them not to get up."

The incoming government will face significant economic challenges, including the need to find savings of between 18 to 24 billion euros ($18.5 billion to $24.75 billion) according to the European Commission. Austria has been grappling with a recession for the past two years, rising unemployment, and a budget deficit currently standing at 3.7% of Gross Domestic Product, exceeding the European Union’s 3% limit.

The breakdown in coalition talks follows Austria’s presidential mandate in October, which tasked Chancellor Nehammer with assembling a new government. This request came after all other parties refused to collaborate with the far-right Freedom Party, which secured 29.2% of the vote in the September national elections.

By Khagan Isayev