Germany coalition talks collapse

German Chancellor Angela Merkel failed to form a government at the weekend. While the euro and German stocks briefly fell they quickly rebounded

The political uncertainty over Merkel's failure to form a three-way coalition government initially triggered a fall in the euro last night and a drop in Germany's Dax index early today.

Germany's Greens party is ready to continue negotiations on forming a new German government, the party's parliamentary group co-chair and one of the party's leaders, Anton Hofreiter, said on Monday.

Whether Germany chooses to have another election in the New Year or it's first minority government since WW2, this could signal end of Mrs Merkel's tenure.

The key sticking points of the negotiations were the issues of migration and climate change.

Her partners in the outgoing government, the centre-left Social Democrats, insisted on Monday that they will not renew the alliance.

A coalition between Mrs Merkel's Christian Democratic Union (CDU), their Bavarian conservative allies, the Greens, and the pro-business Free Democratic Party (FDP) collapsed after representatives from the latter dramatically quit the talks on Sunday.

"I am very skeptical and I believe that new elections would be the better path", she said.

But after four weeks of negotiations, FDP leader Christian Lindner walked out of the discussions, saying there was no "basis of trust" to forge a government with Mrs Merkel's conservative bloc and the Greens.

President Frank-Walter Steinmeier, who would have to decide on those options, said he will meet the various parties this week and urged them to rethink. If there is no agreement, Merkel can form a minority government or the president could call a new election.

Either way, the setback has raised concerns about the political stability of Europe's largest economy.

Mr Altmaier said: "We stand by our responsibility to ensure this country has a stable and reliable government".

It is likely to be a while before the situation is resolved.



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