Austrian Chancellor Karl Nehammer announced his resignation Saturday, following a second failed attempt to form a new government. Negotiations between the People's Party and the Social Democrats collapsed after the liberal Neos party withdrew. The failure marks a significant setback for Austria as it grapples with significant economic challenges.
The People's Party, in a statement, cited "destructive forces" within the Social Democrats, arguing that the proposed coalition program undermined economic competitiveness. Chancellor Nehammer asserted that the party would not agree to terms considered detrimental to the country's economic standing.
Social Democratic leader Andreas Babler expressed regret over the decision, characterizing it as detrimental to Austria. He highlighted the unresolved issue of addressing the previous government's substantial deficit as a key sticking point, adding that he had attempted to facilitate further negotiations.
Austria faces pressing economic issues, including a two-year recession, rising unemployment, and a budget deficit exceeding the EU's 3% threshold. The new government will inherit a substantial deficit needing to be addressed while simultaneously navigating a challenging economic climate, with EU intervention to mitigate a budget deficit of 18 to 24 billion euros.
The negotiations stemmed from a request by Austria's president in October for Nehammer to form a new government after other parties rejected working with the Freedom Party, which secured a significant victory in the September elections. The protracted negotiations underscore the complexity of coalition-building in Austria following the rise of populism.
