Merkel 'prefers new vote' after talks fail

Germany- Merkel's fall could majorly hit the EU

GETTY ARDDr Daniela Schwarzer said the EU needs Germany to remain stable

The airline reported a 17 percent fall in full-year pre-tax profits but said its revenue trends for the first quarter are encouraging. Her center-right CDU is feeling the pressure of her dismayed support base, as a result of her increasingly left-leaning policies.

"Merkel has not suffered yet", because she has "stayed true to her style of politics", said Manfred Guellner, the head of the Forsa polling agency. Life in Brussels is a permanent negotiation, with powerful forces grappling beneath the surface, and the possibility of failure never admitted, however bad things look.

The deeper integration push, championed by French President Emmanuel Macron, also includes the transformation of the euro zone bailout fund into a European Monetary Fund and the creation of a sovereign insolvency mechanism.

Derivatives markets pointed to further upside for the euro with risk reversals still at elevated levels while implied volatility gauges holding near 2017 lows. Speaking after their meeting, Steinmeier described the situation as unprecedented in postwar Germany and urged the country's parties to work together to try to form a government.

The collapse of the talks leaves Chancellor Angela Merkel hanging in the balance - and facing one of the biggest challenges in her long stint in power.

Merkel's government has been adamant that sanctions cannot be lifted without implementation of the Minsk peace accord.

His party's former labour minister Andrea Nahles has suggested the SPD may opt to tolerate a Merkel-led minority government, but this is an unstable option Merkel has dismissed. Better to learn this now than in the early months of a new, and unexpectedly wobbly, government.

As Germany's usually staid and consensus-driven politics enter uncharted territory, Schaeuble, aged 75 and its longest-serving MP, stressed that the country faces "a trial, not a crisis of state".

Mrs Merkel lost votes over her decision to open Germany's borders in 2015 to more than a million asylum seekers.

Europe's longest-serving leader, Mrs Merkel left Monday's talks looking displeased but promised to steer Germany through the crisis.

Mr. Lindner and others need the political courage not just to compromise, but to explain to the public why compromise is vital to German democracy. It's hard to tell whether and how that will change; one potential factor is a leadership struggle inside the Christian Social Union, the Bavaria-only sister to Merkel's CDU, which has been simmering since that party performed particularly badly in the election. It had hoped that a strong German coalition, including the FDP, might help smooth the next phase of negotiations.

The unravelling of the German talks came as a surprise since the main sticking points - immigration and climate policy - were not seen as FDP signature issues.

It overstates the vision and dynamism of Germany's political class but also overlooks the country's underlying stability, how little tinkering (in the short term, at least) its state and economy urgently require and the intricate balancing acts that go into its multi-party governments.

All parties have refused to partner with the far-right nationalist Alternative for Deutschland (AFD), who campaigned on an anti-euro, anti-immigrant platform winning 94 out of 709 parliamentary seats in September's election.

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