German Coalition Talks Collapse After Deadlock on Migration and Energy

Exploratory talks to form Germany's next coalition government collapsed shortly before midnight on Sunday when the pro-business Free Democratic Party (FDP) walked out of marathon negotiations, The Guardian reports.

"The four discussion partners have no common vision for modernisation of the country or common basis of trust," the FDP leader, Christian Lindner, announced after the four parties involved missed several self-prescribed deadlines to resolve differences on migration and energy policy. "It is better not to govern than to govern badly."

The euro slid in Asian trade overnight thanks to the uncertainty in Europe's powerhouse nation. Against the yen, the euro was down 0.6% on the day to a two-month low and slipped 0.5% against the US dollar. It was down 0.43% against the pound at ?1.125.

Chancellor Angela Merkel has been trying to forge a coalition between her Christian Democratic Union (CDU), its Bavarian sister party the Christian Social Union (CSU), the pro-business FDP and the Green party, following federal elections at the end of September.

Announcing the collapse of talks as an "almost historic day", Angela Merkel on Sunday night insisted that the parties would have been capable of reaching a compromise even in spite of their polarised views on migrations, and described the FDP's walk-out as "regrettable".

A so-called "Jamaica" coalition - so nicknamed because the parties' traditional colours mirror those of the Jamaican flag - has only previously been tested at regional level but was the only plausible coalition option open to Merkel.

The Social Democrat leader, Martin Schulz, whose party has played junior partner to Merkel in the German government for the past four years, ruled out the possibility...