Berlin: High-stakes talks to form a new German government collapsed Sunday as the pro-business FDP party walked out, plunging Europe`s biggest economy into a political crisis and potentially precipitating the end of Chancellor Angela Merkel`s career.
After more than a month of gruelling negotiations, Christian Lindner, leader of the Free Democratic Party said there was no "basis of trust" to forge a government with Merkel`s conservative alliance CDU-CSU and ecologist Greens.
"It is better not to govern than to govern badly," said Lindner, adding that "we cannot and will not answer for the spirit of the exploratory papers".
The talks, which turned increasingly acrimonious, had stumbled on issues including the divisive matter of immigration.
Merkel`s liberal refugee policy that let in more than a million asylum seekers since 2015 had also pushed some voters to the far-right AfD, which in September elections campaigned on an Islamophobic and anti-immigration platform.
With the Social Democratic Party already ruling out returning to a coalition with Merkel, and the veteran leader herself refusing a minority government, Germany would likely be forced to hold new elections.
And Merkel, in power since 2005, would face questions from within her party on whether she is still the best candidate to lead them into a new electoral campaign.
Top-selling Bild daily said earlier Sunday that a failure to forge a coalition puts "her chancellorship in danger".
A poll by Welt online also found that 61.4 percent of people surveyed said a collapse of talks would mean an end to Merkel as chancellor. Only 31.5 percent thought otherwise.Merkel had been forced to seek an alliance with the unlikely group of parties after September`s elections left her without a majority.
Party chiefs had initially set 6:00 pm (1700 GMT) Sunday as the moment of truth, but the deadline went by without a breakthrough -- the second overtime after already missing a previous target on Thursday.
But signs that talks were going badly began emerging and Bild daily said on its website that "failure is in the air" as parties dug in their heels on key sticking points.
Anxious to curb the haemorrhage of voters to the AfD, Merkel`s Bavarian allies CSU has demanded a 200,000 cap on new arrivals.
Negotiators were unable to square that demand with the Greens` push for war refugees -- who benefit from temporary protection -- to be allowed to bring their family members to Germany.
"We will not accept that people who are already getting a lower status of protection by law are also excluded from family reunions. That is inhumane," Greens negotiator Juergen Trittin told the Bild am Sonntag newspaper.
The parties also differed on environmental issues, with the ecologists wanting to phase out dirty coal and combustion-engine cars, while the conservatives and FDP emphasise the need to protect industry and jobs.
As parties refused to budge, Germany`s President Frank-Walter Steinmeier told Welt am Sonntag newspaper that "all sides are aware of their responsibilities. And this responsibility means not returning their mandate to voters".
Sueddeutsche daily noted that Steinmeier`s warning came because he sees in new elections "the risk that even a bigger coalition or a Jamaica coalition would no longer have a majority".
"Then the loss would have been greater than the failure of forging a government," it said.