LUXEMBOURG The conservative party that has ruled Luxembourg for most of the last 70 years has acknowledged that other parties are likely to form the next government and end Jean-Claude Juncker's 19-year term as prime minister.
Juncker's Christian Social People's Party (CSV) has led governments for all but five years since World War Two, but lost three seats in an election on Sunday to leave it with just 23 in the 60-seat parliament.
The Socialists, who quit Juncker's government in July, blaming him for failing to curb abuses of power by the secret service, now look set to form a coalition with a different center-right group, the Democratic Party, and the Greens.
The three parties together have a slim majority of 32 seats.
Juncker, the EU's longest-serving head of government, has been a central figure in Europe's debt crisis, leading the Eurogroup of euro zone finance ministers until early this year.
His departure would be unlikely to herald radically different policies on Europe or on the economy, among the healthiest in Europe.
However, it could lead to a loosening of laws on issues such as abortion as the Democratic Party, while economically right of center, is less conservative on social issues that the CSV.
DP leader Xavier Bettel, the popular mayor of Luxembourg city, said that forming a government with the other two parties was "a realistic option".
"We will contact them to come together tomorrow to see if there is a possibility to work together in the coming five years," he told RTL television late on Monday.
CSV party president Michel Wolter said his party's rivals were very likely to form the new government.
"To pretend that talks are only starting now, that is all political banter. We have seen clearly that the three parties are in agreement to form a coalition," Wolter told RTL Radio.
Luxembourg, with a population of just over half a million people between France, Germany and Belgium, is the one of the world's smallest countries, but is a vibrant financial center. It is second only to the United States for investment funds and is also a leading private banking hub.
(Reporting by Michele Sinner; Writing by Philip Blenkinsop and Martin Santa; Editing by Robin Pomeroy)