Merkel bloc, SDP clinch deal for coalition government

Martin Schulz has vowed there will be a European finance minister under his coalition with Merkel

Social Democrat spokesman Serkan Agci told reporters outside his party's headquarters in Berlin, where the talks took place, that there had been a "breakthrough" agreed upon by the party leaders but said final revisions were still being made on the document by negotiating teams, which would also need approval.

Had the talks failed, Merkel's only options would have been to form a minority government or hold new elections.

German Chancellor Angela Merkel and Social Democratic leader Martin Schulz have said they are confident they will be able to reach agreement on a new coalition government.

After the week of negotiations and the overnight session, an obviously exhausted Mrs Merkel told reporters she too was "optimistic that things will move forward".

Coalition agreement CSU leader Horst Seehofer Angela Merkel and Martin Schulz announce their programme
GettyCoalition agreement CSU leader Horst Seehofer Angela Merkel and Martin Schulz announce their progr

Dorothee Baer, of the CDU's Bavarian-only sister Christian Social Union, tweeted a photo of the agreement's cover page in her hand just before 9 a.m., saying "still quite warm". That vote will likely depend on whether rank and file members are satisfied that the party will have greater influence in a new government than in the previous grand coalition.

Merkel initially turned to two smaller parties, the Free Democrats and Greens, to form a new coalition government for her forth term, but when those talks collapsed in November, she had to once more woo a reluctant SPD for a new power pact.

Acting German chancellor Angela Merkel moved one, tortuous step closer to a fourth term on Friday morning after all-night talks ended in preliminary agreement for a new grand coalition in Berlin. The vote saw all three parties lose considerable ground compared to 2013, with the far-right Alternative for Germany picking up most of the migrating voters. Berlin's partners are awaiting a new government to help propel Brexit talks, euro zone reform and European Union diplomatic initiatives.

Faced with the prospect of prolonging the political uncertainty of the past three months, Schulz relented on that pledge - at least for the sake of preliminary talks - but that does little to erase the growing policy differences between the two sides.

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The embattled mainstream parties are also struggling to fend off the encroaching far right, which has seized on anger and fears over a mass influx of refugees and netted a record showing at the September poll.

Merkel, Schulz and several dozen other negotiators renewed coalition talks on Sunday.

On the contentious issue of family reunification for refugees, the parties agreed to set a limit of 1,000 people per month, according to reports.

Scepticism is high after the SPD scored a humiliating result in September, its worst of the post-war era.

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The SPD's youth wing chief Kevin Kuehnert has said he would embark on a national tour to press his case against a new grand coalition, known as "GroKo" in German political shorthand.

He told Der Spiegel Online there was a good chance party members would reject any plans for a "grand coalition". Unable to win the support of another party for a governing coalition yet, Merkel is now staring down the possibility that the monthslong standoff may force a new election entirely.

Published by the business daily Handelsblatt on Thursday, the poll found that 56% see Merkel departing early.

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