Germany's Social Democratic Party board approves Merkel coalition deal


German Chancellor Angela Merkel's conservatives and the Social Democrats pledged today to work closely with France to strengthen the euro zone, in Berlin's first substantive response to President Emmanuel Macron's ambitious European Union reform proposals.

But he reconsidered his position after Merkel failed to form a three-way coalition with the Greens and the Free Democratic Party in November.

But SPD leader Martin Schulz, a former president of the European Parliament, is pursuing a very different vision, calling for the creation of a United States of Europe by 2025 - seen as an expensive distraction by many conservatives.

The main hurdle to a rerun of the so-called grand coalition of Germany's two main parties now lies with the Social Democrats, who at first refused to extend their alliance with Merkel after suffering their worst electoral defeat since World War II.

Commenting on the current political situation in the country, German President Frank-Walter Steinmeier said that "we are now facing a situation that has never happened before in the history of the Federal Republic of Germany, that is for nearly 70 years".

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.

Four months on, Germany has given a guarded nod of agreement to euro zone reform proposals from French president Emmanuel Macron.

"We want to strengthen the European Union financially, so that it can better fulfill its tasks: which is why we will take this into account during the preparation of our financial framework for the upcoming years", the 28-page document, which the two parties agreed upon, said.

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Politicians stayed up all night thrashing out a deal, with the talks lasting more than 24 hours.

Some political observers expect a now weakened Merkel to leave early and allow a successor to settle into the chancellorship ahead of 2021 elections.

A blueprint for formal negotiations was agreed between Merkel's Christian Democrats (CDU) and their former coalition partners, the Social Democrats (SPD) almost four months after elections were held September.

The parties agreed to limit numbers of refugees and migrants coming to Germany to around 200,000 following arrival of more than 1million asylum seekers since 2015.

If the SPD delegates give the thumbs up, formal coalition talks could in theory begin as soon as January 22.

The coalition blueprint starts with Europe, pledging to, "in close partnership with France, sustainably strengthen and reform the eurozone so that the euro can better withstand global crises". In reality, the next "grand coalition" wouldn't be up and running before the beginning of April.

Opinion polls suggest most Germans are less than enthusiastic about a GroKo, with a Focus magazine survey giving it just 30 percent support.