Chancellor Angela Merkel was left scrambling to drag Germany out of crisis on Monday after high-stakes talks to form a new government collapsed, potentially forcing Europe's top economy into snap elections.
Germany now faces weeks, if not months of paralysis with a lame-duck government that is unlikely to take bold policy action at home or on the European stage.
With no other viable coalition in sight, Germany may be forced to hold new elections that risk being as inconclusive as September's polls.
Merkel, whose liberal refugee policy has proved deeply divisive, had been forced to seek an alliance with an unlikely group of parties after the ballot left her without a majority.
But following more than a month of gruelling negotiations, the leader of the pro-business FDP, Christian Lindner, walked out of talks overnight, saying there was no "basis of trust" to forge a government with Merkel's conservative alliance CDU-CSU and the ecologist Greens.
'Populist agitation'
The acrimonious negotiations stumbled on a series of issues including immigration.
Merkel let in more than one million asylum seekers since 2015, sparking a backlash that allowed the far-right AfD party to win its first seats in parliament.
Its parliamentary co-leader Alexander Gauland relished the collapse of the talks, saying that Merkel had "failed" and that his party "looks forward to potential new elections" in which it stands to make strong gains.
The negotiating parties also differed on environmental issues, with the Greens wanting to phase out dirty coal and combustion-engine cars, while the conservatives and FDP emphasised the need to protect industry and jobs.
The Greens angrily deplored the collapse of talks, saying they had believed a deal could be done despite the differences and accusing the FDP of negotiating in bad faith.
Chancellor in danger
Merkel could now try to convince the Social Democratic Party (SPD), which has been the junior coalition partner in her government since 2013, to return to the fold.
But after suffering a humiliating loss at the polls, the party's top brass has repeatedly said the SPD's place was now in the opposition.
Merkel, who has been in power for 12 years, could also lead a minority government although she had signalled that she was not in favour of such instability.
Germany could therefore be forced to hold new elections, which would have to be called by President Frank-Walter Steinmeier.
But that is not without peril for Merkel, who would face questions from within her party on whether she is still the best candidate to carry its banner into a new campaign.
Top-selling Bild daily said a failure to forge a tie-up, a so-called "Jamaica coalition" because the parties' colours match those of the Jamaican flag, put "her chancellorship in danger."
A poll by Welt online also found that 61.4% of people surveyed said a collapse of talks would mean an end to Merkel as chancellor. Only 31.5% thought otherwise.
