Talks on forming a coalition government in Germany have collapsed after the pro-business Free Democrats (FDP) unexpectedly pulled out of negotiations.

The decision has thrust the country into a political crisis. Chancellor Angela Merkel will meet the country’s president today and it seems a snap election may be on the cards.

Germany’s Angela Merkel to inform president of unsuccessful coalition talkshttps://t.co/FaL9ip3YWgpic.twitter.com/UNAcVpcF95 — The Globe and Mail (@globeandmail) November 20, 2017

The FDP’s leader Christian Linder said they’d been unable to form a “basis of trust”.

“We would be forced to give up our principles, and everything we have been working for for years. We will not abandon our voters by supporting policies that we are not really convinced of. It is better not to rule than to rule wrongly. Good bye.”

The collapse of the talks is a set back for Merkel whose conservatives were weakened after and election which they won but with a reduced number of seats.

German Chancellor Angela Merkel:

“We believe we were on a path where we could have reached an agreement, therefore – with all respect for the FDP – I regret that we could not find a common solution.”

The failure to form a government in Europe’s largest economy could have implications for the rest of the EU.

The other concern is that if fresh elections are called the far-right “Alternative for Germany” (AfD) may win more that the almost 13 percent of votes it secured in September.