Germany’s Angela Merkel and Martin Schulz on Friday reached an agreement in principle on a new coalition deal that ends Merkel’s 12-year-old rule, German media reported.
The new coalition government will be signed in Berlin on Saturday, ending a lengthy post-election deadlock.
Germany’s smaller parties agreed to expand unemployment benefits for people aged between 25 and 35, the Deutsche Presse-Agentur newspaper said, citing sources from both parties. The proposal also calls for an increase in the minimum wage, according to the report.
With the election last September casting a cloud over the chancellery, Chancellor Angela Merkel of Merkel’s conservative Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union (CSU), failed to win an outright majority.
Jens Spahn, a top conservative official in the outgoing Bundestag, told the Funke media group: “I will be satisfied if Merkel remains chancellor. The minority government was an extreme option. We will only see the benefit of a stable government.”
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The Christian Social Union (CSU) had demanded the right to avoid being sidelined by a grand coalition, Merkel’s third in the past four years. The party is the dominant force in Bavaria, a traditionally staunchly Catholic state on Germany’s north-western border.
Merkel’s bloc secured the most seats, but fell short of the total majority needed to govern alone.
Merkel agreed to conduct formal coalition talks with the other parties after an exploratory alliance with the pro-business Free Democrats (FDP) failed because of policy differences.
The Greens and pro-immigration, pro-business FDP both complained that their demands had not been met.
In their exploratory talks, Merkel and Martin Schulz had proposed introducing a basic minimum wage of 8.50 euros per hour across the country. They also proposed an additional 4 billion euros in child benefits.
Merkel, who is Europe’s longest-serving leader, has been weakened by her failure to form a working government more than three months after elections. Her authority has been tested as well. She also faces internal election threats from within her own party and from the far-right.
“I am relieved that a solution is now on the table,” Volker Kauder, the leader of Merkel’s CDU parliamentary faction, told the Bild newspaper.
“And it is clear to us that we will have to have more guarantees regarding the FDP about their positions on key issues.
“The future of Germany and Europe demand we now find a way to do everything possible to continue Chancellor Merkel’s work,” he said.
Economy Minister Peter Altmaier, a deputy chancellor and confidant of Merkel, said he was excited by the prospect of a stable government, which is especially important after the Brexit referendum and the US midterm elections in the coming months.
“A stable coalition also means a stable government. That is critical for the future,” Altmaier told the ARD public television.
The Social Democrats, who fell just short of an absolute majority, began exploratory talks last month and hope to cut a deal with Merkel before the September election, which they have pledged to hold.
With files from Reuters