Could Germany have a deal?

Deutschland Sondierungsgespräche in Berlin Angela Merkel

Merkel strikes preliminary deal to hold power in German coalition

Many in the SPD rank-and-file fear a re-run of the grand coalition will further diminish the identity of the party, which suffered its worst result in September's vote since 1933.

At the start of the final day of exploratory talks that could lead to formal negotiations, Merkel said it would be an arduous day but she recognised that Germans expected results.

How different this is from the night last September when she seemed set to become the longest serving Chancellor in post-war German history.

Data published on Thursday showed the economy grew by 2.2% a year ago, the strongest rate since 2011.

To win over the SPD, Merkel agreed to 5.95 billion euros ($7.2 billion) of investment in education, research and digitalization by 2021, expanded child care rights, and a pledge to strengthen Europe's cohesion with increased German contributions to the European Union budget.

It was a tense twenty-four hours and at the end, the possibility of a deal.

Oskar Niedermayer of Berlin's Free University said that "in the interest of her party's electoral strength, she should not stay in office for the entire legislative term".

"Living can not be allowed to be a luxury", he said.

The first chapter of the document was dedicated to European policies, which stresses the German-Franco initiative in European integration and says Germany wants to develop the European Stability Mechanism (ESM) into a parliamentary-controlled European Monetary Fund.

Closed-door talks this week have centered on whether the parties can find the basis to open formal negotiations on a coalition agreement to form a new government.

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SPD Chairman Martin Schulz was addressing those members when, standing alongside Merkel, he told reporters that the outline deal would preserve and strengthen Germany's welfare state for future generations.

"There are still multiple risks to an overall agreement", he said. Merkel's inability to form a government had raised questions about her political future after 12 years at the helm of Europe's largest economy.

Mr Macron was elected last May on a promise to overhaul the European Union, which is showing new economic vigour after almost a decade of financial crisis but has been shaken by Britain's decision to leave the bloc and the shift to "America First" policies under President Donald Trump.

It vows efforts to, "in close partnership with France, sustainably strengthen and reform the eurozone so that the euro can better withstand global crises". "We are convinced that Europe needs a fresh start and have developed the right ideas to go with it".

Already, in the Christian Democrats' Bavarian sister party, the Christian Social Union, its chairman Horst Seehofer is stepping down as state premier in favor of the much younger Markus Söder.

Carsten Nickel, deputy research director at advisory firm Teneo Intelligence, said of Merkel's centrist strategy: "The real challenge has always been to sell this logic internally".

The Bild newspaper reported that the breakthrough was reached after Merkel's conservatives ceded to SPD demands for an equalisation of health-insurance contributions made by employers and employees.

Rules to attract skilled immigrants, though parties at odds on what they should call such a law.

But the conservatives had campaigned on a programme of "tax cuts for all".

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