BERLIN — 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 grueling 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.

“It is better not to govern than to govern badly,” he said, adding that the parties did not share “a common vision on modernizing” Germany.

Voicing regret for the FDP’s decision, Merkel vowed to steer Germany through the crisis.

“As chancellor... I will do everything to ensure that this country comes out well through this difficult time,” she said.

News magazine Der Spiegel called the breakdown in negotiations a “catastrophe” for Merkel and said Germany, long seen as an island of stability, was having its “Brexit moment, its Trump moment”.

French President Emmanuel Macron, who has sought Merkel’s backing for an ambitious EU reform plan, expressed concern about Germany’s political deadlock, saying “it is not in our interest that the situation becomes tense”.

The euro fell on the news, but Germany’s blue-chip DAX remained largely firm, losing just 0.47 percent in early trade.

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 emphasized 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.

Lindner, who had taken a harder line on refugees as the talks progressed, “opted for his kind of populist agitation instead of political responsibility”, Greens Europe MP Reinhard Buetikofer tweeted.

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 signaled that she was not in favor of such instability. — AFP