German chancellor Angela Merkel pledges 'fresh start' for Europe with new government

Angela Merkel attends a joint statement after the exploratory talks between Merkel's conservative bloc and the Social Democrats on forming a new German government in Berlin Germany Friday Jan. 12 2018. (AP

Merkel strikes preliminary deal to hold power in German coalition

Leaders of Angela Merkel's conservative Christian Democratic Union bloc and the centre-left Social Democrats have cleared a first hurdle towards the formation of the next German government after marathon overnight talks. The SPD leadership will put the result of the exploratory talks to a party convention on January 21.

Germany's second largest party SPD said in a statement on Friday that its 45-member board had overwhelmingly given its blessing to formal coalition negotiations with CDU - CSU.

After more than 24 hours of talks and months of political paralysis, red-eyed party chiefs and their negotiating teams reached an in-principle agreement to start formal coalition talks that could lead in coming months to a new government for the biggest European Union economy.

The paper came out on Friday morning after the week-long exploratory talks between the SPD, the Christian Democratic Union and its Bavarian sister Christian Social Union. "I am already speaking of these years because I believe we will succeed".

After September's elections, questions were raised about Merkel's future and the long talks undermined her authority.

The euro jumped to a three-year high against the USA dollar after the deal was announced, reflecting the relief of analysts and the perceived importance of German leadership to the European economy.

Merkel initially turned to two smaller parties, the Free Democrats and Greens, to form a new coalition government for her fourth term.

Friday's agreement opened with an acknowledgement that the September election showed "many people were dissatisfied".

The conservatives also performed poorly in the election, and the three coalition parties' support dropped by a total of almost 14 percentage points.

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SPD's Martin Schulz said the paper reflects the desire for renewal, in families, education and the digital challenge, adding social cohesion must be strengthened.

Strengn cohesion with Europe to play an active role in strengning European integration.

The parties pledged to fight tax dumping and evasion in Europe, pushing for "fair taxation of big companies" including internet giants Google, Apple, Facebook and Amazon, and called for unspecified minimum rates for corporate tax.

The two parties also stress Europe's role in peace and global responsibility in the document, clearly rejecting protectionism, isolationism and nationalism and calling for more worldwide cooperation.

Merkel now leads a caretaker government, limiting her ability to take major policy initiatives as French President Emmanuel Macron pushes an ambitious European reform agenda. "But we carried out the talks in spirit of finding a solution".

The paper vows close partnership with France, saying that "we want to sustainably strengthen and reform the euro zone so that the euro can better withstand global crises", the parties said.

But they managed to reach agreement on key sticking points such as migration.

Left party chairwoman Sahra Wagenknecht said the deal would perpetuate "blatant social injustice", including Germany's precarious low-wage sector and poverty in old age, while business raked in "gushing dividends".

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