Negotiations to form the German government broke down, dealing a blow to Chancellor Angela Merkel and throwing the leadership and direction of Europe’s largest economy into doubt.
Late Sunday, Christian Lindner, chairman of the small, pro-business Free Democratic Party, broke off talks with Ms. Merkel’s conservative camp and the center-left Greens, saying four weeks of discussions and extended deadlines had failed to yield the vision and necessary trust to build a government among the three partners.
The collapse of talks leaves Germany with a caretaker government and Ms. Merkel without a majority in Parliament almost two months after a general election that gave her Christian Democratic Union its worst result since 1949.
The political gridlock—a novelty in a country long used to ruling coalitions, compromise-making and consensus-building—has thrown Ms. Merkel’s fourth term into question, although analysts said none of Germany’s parties had an obvious contender to assume her mantle.
Speaking after Mr. Lindner’s departure, Ms. Merkel said, “I assure you: As German chancellor, as acting chancellor I will do all I can to ensure this country is led well through the difficult weeks ahead.”
Both the conservatives and the Greens said a deal had been within reach, regretting the Free Democrats’ decision to pull out.
“This will be blamed on Ms. Merkel—among others—because her negotiating skills weren’t good enough for the first time,” said Jürgen…