Luxembourg will hold new elections after Prime Minister Jean-Claude Juncker announced he would resign following a secret service scandal.
Mr Juncker, Europe’s longest-serving head of government, told parliament he would step down on Thursday.
The move came as his junior coalition partner called for the dissolution of parliament and early elections.
It follows claims he failed to stop illegal security agency activity such as phone-taps and corruption.
Mr Juncker has been prime minister since 1995 and was head of the Eurogroup of eurozone finance ministers between 2005 and January 2013.
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