German president Frank Walter Steinmeier has warned Berlin leaders that Europe is waiting for them to shoulder their collective responsibility and resolve the unprecedented political crisis.

Two months after Germany’s federal election, five weeks of exploratory talks collapsed late on Sunday night, casting uncertainty over Chancellor Angela Merkel’s future in office.

Constitutional responsibility for resolving the crisis now falls to Mr Steinmeier, the former foreign minister, who will need all his diplomatic skills to calm tempers and, as he signaled on Monday, allow a snap election only as a last resort.

“The mandate to form a government is perhaps the highest mandate of voters to parties, and that mandate remains,” he said in a television address after crisis talks with Dr Merkel. Current law does not allow parties to “simply hand back” the mandate to voters, he said.

German Chancellor Angela Merkel leaves the presidential residence Bellevue Castle in Berlin where she met the German president after coalition talks failed overnight. Photograph: John MacDougall/AFP/Getty Images

Talks for a “Jamaica” coalition, so-called because the colours of the parties involved match those of the island’s flag, broke down because of irreconcilable difference over migration and climate policy.

Mr Steinmeier will first hold talks with Dr Merkel’s Christian Democrats (CDU), their CSU Bavarian allies, and the two smaller parties: the Greens and the Free Democratic Party (FDP).

Hours after he collapsed the talks, FDP leader Christian Lindner dismissed claims he had done so for political gain.

“There was no common path, no trust in all players,” he said.

He pointed to 237 unresolved points in discussion documents and accused Dr Merkel of getting lost in detail rather than resolving the negotiation parties’ fundamental ideological differences.

As Berlin buzzed with speculation about the road ahead, most political scientists agreed that the FDP – for all its protests to the contrary – were key to the collapse in coalition talks.

‘Quasi-populist’ force

“Either he realised his party was not ready for government for wants to re-position his party as a quasi-populist, national liberal force,” said Prof Karl-Rudolf Korte of the University Duisburg-Essen.

Looking on from outside, the centre-left Social Democratic Party (SPD) were quick to rule out any return to power and a third grand coalition with the CDU.

“Dr Merkel has failed, and with it her political style of moderating while giving no direction or goal,” said Andrea Nahles, the SPD’s leader in the Bundestag. “We will participate in talks but are not afraid of fresh elections.”

But their call for fresh elections may put them at odds in talks on Wednesday with Mr Steinmeier, a long-time senior SPD member and former chancellor hopeful.

On Monday, the aftershocks of the coalition talks collapse began to be felt far from Berlin. In Munich, a CSU leadership battle threatens to destabilise Dr Merkel’s shell-shocked centre-right bloc. Senior CSU figures suggested it would come to a minority government in Berlin “at most for a transitional period”.

“Germany is one of the most important countries in the world … I think we are dependent on a stable government,” said Alexander Dobrindt, the CSU’s leader in the Bundestag.

Next month’s European leaders’ meeting in Brussels, which is expected to be dominated by Brexit, now has to contend with an acting German chancellor.

French president Emmanuel Macron effectively acknowledged his euro zone reform plans are now on ice, saying on Monday it was “not in our interest” that the German standoff drags on.

‘Situation is unchanged’

German business leaders expressed concerns over the effect of extended political instability on their order books, but a group of economists who advise the government said “the situation is unchanged”.

Politicians from the far-right AfD, a big winner in September’s poll, were delighted at the collapse of coalition talks. “Mrs Merkel has failed, it is time she went as chancellor,” said Alexander Gauland, AfD co-leader in the Bundestag. “It’s a good thing that Jamaica hasn’t come to pass, it wouldn’t have been a coalition for a different style of politics but more of the same.”

Mindful of concerns beyond Germany, in particular of a weaker euro, Mr Steinmeier urged Berlin politicians to look beyond domestic tactics to resolve the standoff.

“Particularly among our European neighbours there would be great incomprehension and concern if, in Europe’s biggest and most economically strong country of all places, political forces did not live up to their political responsibility,” he said in a televised address.