Talks among four German parties seeking to form a coalition government after an election that weakened Chancellor Angela Merkel broke down after the pro-business Free Democrats (FDP) pulled out, citing irreconcilable differences.

The decision by the FDP means that Merkel’s conservative bloc will either seek to form a minority government with the Greens or a new election will be held.

Other options for Merkel would be attempting to continue her current coalition with the Social Democrats, which that party has said it will not do.

“Today there was no progress but rather there were setbacks because targeted compromises were questioned,” FDP leader Christian Lindner told reporters.

The hope following elections in September was for the formation of a “Jamaica” coalition – nicknamed as the parties’ traditional colours mirror the Jamaican flag.

It would have meant forging a coalition between between Merkel’s Christian Democratic Union (CDU), its Bavarian sister party the Christian Social Union (CSU), the FDP and the Green party following.

The poll saw the radical right-wing party AfD capture 13 per cent of the vote, enough to enter the German parliament for the first time, and the talks have seen the CDU, the CSU and the FDP wrestle to take the toughest line on immigration.