Austrian Chancellor and member of the Austrian People's Party (OeVP) Karl Nehammer on September 29, 2024 in Vienna, Austria. SeanGallup / Getty Images

Austrian Chancellor Karl Nehammer said Saturday he will resign in the coming days after talks on forming a new government failed a second time.

The announcement came after the People's Party and the Social Democrats continued coalition talks a day after the liberal Neos party's surprise withdrawal from discussions.

"Unfortunately I have to tell you today that the negotiations have ended and will not be continued by the People's Party," Austrian Chancellor Karl Nehammer from the conservative People's Party said in a statement on social media.

He said that "destructive forces" in the Social Democratic Party have "gained the upper hand" and that the People's Party will not sign on to a program that is against economic competitiveness.

Social democratic leader Andreas Babler said he regretted the decision by the People's Party to end the negotiations. "This is not a good decision for our country," he said.

Babler said that one of the main stumbling blocks had to do with how to repair the "record deficit" left by the previous government.

"I have offered to Karl Nehammer and the People's Party to continue negotiating and called on them not to get up," he told reporters Saturday evening.

The next government in Austria faces the challenge of having to save between 18 to 24 billion euros, according to the EU Commission. In addition, Austria has been in a recession for the past two years, is experiencing rising unemployment and its budget deficit is currently at 3.7% of Gross Domestic Product - above the EU's limit of 3%.

The talks had dragged on since Austria's president tasked the conservative chancellor in October with putting together a new government. The request came after all other parties refused to work with the leader of the far-right Freedom Party, which in September won a national election for the first time with 29.2% of the vote.

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