The smallest partner of a prospective three-party coalition, the liberal Neos party, decided not to continue the discussions to form a new government.

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Talks to form a new government in Austria have collapsed after the smallest of the prospective partners, the liberal Neos party, pulled out of negotiations leaving the remaining parties with the slimmest possible majority.

Neos, alongside Austrian Chancellor Karl Nehammer’s conservative Austrian People’s Party (ÖVP) and the centre-left Social Democrats (SPÖ) had been trying to forge a three-party ruling coalition after far-right Freedom Party won national elections in September.

Neos leader Beate Meinl-Reisinger said progress was impossible and that “fundamental reforms” had not been agreed upon. She informed the other party leaders that Neos members “won’t continue” talks.

Talks had dragged on after all other parties refused to work with the leader of the Freedom Party (FPÖ), Herbert Kickl, who came first with 29.2% of the vote, forcing the ÖVP and the SPÖ to try and recruit a smaller party to bolster their majority.

Reisinger, whose party gained 8.1% of the vote, attributed her party’s decision to disagreement over fiscal policy. Her party had long run on a platform of economic reform, and the leader said during a hastily thrown-together press conference that certain issues — such as raising the retirement age — proved sticking points between the ideologically distinct parties.

ÖVP’s secretary, Christian Stocker, placed the blame on a certain faction of “backward-looking forces” among the Social Democrats who had failed to compromise on Neos ideas.

It’s not clear what could happen next as Nehammer’s party and the SPÖ now have the slimmest possible majority needed in parliament — with 92 seats out of 183.

Reisinger indicated that talks between the ÖVP and the SPÖ would continue, saying that her party was still prepared to throw its support in parliament behind policy points that had already been agreed upon in discussions so far.

A fresh election, however, is not totally out of the question. The far-right FPÖ immediately welcomed such a possibility as opinion polls indicate their support has only grown since the election. In a survey commissioned by newspaper Der Standard, the FPÖ increased their support to 35% of the vote according to prospective voters in December.

FPÖ’s general secretary, Michael Schnedlitz, called on Nehammer to accept what he called his election defeat and warned against another three-party coalition on the basis of the “German model” — referring to the quarrelsome three party coalition in neighbouring Germany that collapsed before the end of its legislative term last year.

The FPÖ and its controversial leader, Hebert Kickl, ran on an anti-immigration and broadly Euroskeptic platform promising to tackle illegal immigration and Austria’s consistently high inflation rate.

The other parties refused to work with Kickl, who has long-attracted criticism for his casual use of Nazi-era terms — having once called himself the “Volkskanzler” — as well as his opposition to vaccinations and lockdowns during the pandemic.

Opposition parties had largely banded together to keep Kickl out of government. Kickl, in return, branded the coalition discussions a “loser mess” on more than one occasion.

Instead of a new election, the two bigger parties could press forward in discussions or look to recruit the environmentalist Greens as a third partner.

Nehammer outgoing government is currently a coalition with the ÖVP and the Greens — two ideologically distinct parties that often disagreed.

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