(Bloomberg) — Austria’s Chancellor Karl Nehammer said he’ll step down as head of government and chairman of the conservative People’s Party after failing to form a new coalition following September elections.

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The move raises the chances of repeat elections and may further boost support for the far-right Freedom Party, which won the most seats at the September ballot. All other parties with parliamentary mandates have so far rejected a coalition with its leader, Herbert Kickl.

“An agreement has not been possible on significant core issues,” Nehammer said in a statement on X. “I will step down as chancellor as well as leader of the People’s Party in the following days, and facilitate an orderly handover.”

Efforts to form a centrist coalition had narrowed down to talks between the conservatives and the Social Democrats on Saturday after the liberal NEOS abandoned talks earlier in the week. Nehammer subsequently said on Saturday he’s also ending talks with the Socialists.

“We were prepared to make compromises,” said Andreas Babler, the leader of the Social Democrats, who entered government talks with his eye on introducing a new inheritance tax. Babler, the mayor of a small town south of Vienna, applauded Nehammer’s conduct during negotiations, reserving criticism for the chancellor’s party.

The political turmoil hits Austria at a difficult time, with large swathes of its economy facing headwinds and its budget in need of consolidation. Nehammer has been chancellor since taking over from Sebastian Kurz, who resigned in 2021 due to a corruption investigation.

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