Germany's Social Democrats (SPD) said Monday they remained opposed to forming a coalition with Chancellor Angela Merkel's conservatives and would push for a new general election. Merkel also confirmed that she would be ready to lead her party into any new vote.
Whether Germany chooses to have another election in the New Year or it's first minority government since WW2, this could signal end of Mrs Merkel's tenure.
The breakdown of the talks seemingly leaves Germany with two options: Mrs Merkel forms a minority government, or President Steinmeier calls a new election if no government is formed.
The four parties have put Germany in "a hard situation", Schulz said, adding that he and his party believe voters should have another say in what government should be formed.
The key sticking points of the negotiations were the issues of migration and climate change.
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Speaking to state broadcaster ARD Monday evening, Merkel said that the "path of minority government" should be considered "very very closely".
Mr Steinmeier said: 'There would be incomprehension and great concern inside and outside our country, and particularly in our European neighbourhood, if the political forces in the biggest and economically strongest country in Europe of all places did not fulfil their responsibility'.
Month-long negotiations to form a coalition government fail, plunging Germany into a crisis that could see it hold new elections.
However, she said the SPD would use the talks with Steinmeier to try to find future solutions.
But after four weeks of negotiations, FDP leader Christian Lindner walked out of the discussions, saying there was no "basis of trust" to forge a government with Mrs Merkel's conservative bloc and the Greens.
It is likely to be a while before the situation is resolved.