VIENNA (AP) — Austrian Chancellor Karl Nehammer said Saturday he will resign in the coming days after talks on forming a new government failed a second time.

The announcement came after the People’s Party and the Social Democrats on Saturday continued coalition talks a day after the liberal Neos party’s surprise withdrawal from discussions.

“Unfortunately I have to tell you today that the negotiations have ended and will not be continued by the People’s Party,” said Nehammer, the conservative party's leader, in a statement on social media.

He said that “destructive forces” in the Social Democratic Party have “gained the upper hand” and that the People’s Party will not sign on to a program that it considers to be against economic competitiveness.

Social democratic leader Andreas Babler said he regretted the People’s Party decision to end the talks. “This is not a good decision for our country,” he said.

Babler said that one of the main stumbling blocks had to do with how to repair the “record deficit” left by the previous government.

“I have offered to Karl Nehammer and the People’s Party to continue negotiating and called on them not to give up," he told reporters Saturday evening.

The next government in Austria faces the challenge of having to save between 18 to 24 billion euros, according to the EU Commission. In addition, Austria has been in a recession for the past two years, is experiencing rising unemployment, and its budget deficit is currently at 3.7% of Gross Domestic Product — above the EU’s limit of 3%.

Babler blamed the collapse of the negotiations on “forces within the People’s Party” that were against a coalition with the Social Democrats, while praising Nehammer for his readiness to compromise.

A coalition between the People’s Party and the Social Democrats was considered shaky from the beginning since the two parties together only have a razor-thin one-seat majority in the Austrian parliament.

It was not immediately clear what would happen next.

The People’s Party will have to search for a replacement for Nehammer, who has always ruled out the possibility of a coalition with far-right leader Herbert Kickl. But Nehammer’s expected resignation could now prompt the party to rethink its options under new leadership.

People's Party officials planned to meet Sunday to discuss choosing a new leader.

The People’s Party and the far-right Freedom Party are close on economic policies as well as other issues such as migration and are already working together in five coalitions on the local level.

An early election would be another option. But given Austrian election laws, such an election would unlikely take place before May.

Coalition talks had dragged on after Austria’s president tasked the conservative chancellor in October with putting together a new government. The request came after all other parties refused to work with the leader of the far-right Freedom Party, which in September won a national election for the first time with 29.2% of the vote.

According to the latest opinion polls published in December, the Freedom Party increased its support to between 35% and 37%.

Party leader Herbert Kickl criticized Nehammer, Babler and Austria’s President Alexander Van der Bellen in a written statement on Saturday evening for having created “chaos instead of stability” and said the ball is now in Van der Bellen’s court.

Van der Bellen is expected to make a statement tomorrow, Austrian's public broadcaster ORF reports.