• By Matthew Day, telegraph.co.uk
The People's Party, the largest group in a five-party coalition, walked out amid disputes over how to cope with the country's severe problems.
Unemployment has now hit 20 per cent and the economy contracted by 18 per cent last year.
The People's Party quit after its action plan failed to get the backing of Valdis Dombrovskis, the Latvian prime minister, who labelled it "populist".
Mr Dombrovskis warned the People's Party's departure could cause yet further economic instability.
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