Angela Merkel has taken a crucial step towards ending a four-month period of political uncertainty by reaching a coalition agreement with the centre-left Social Democrats – but at the cost of giving the party a greater role in government.



Following a marathon of all-night dealmaking sessions and several missed deadlines, Merkel’s Christian Democratic Union on Wednesday agreed on the terms of a fresh deal with the SPD, whose supporters will now get a final say on the agreement through a membership vote.

But the prize of a renewed “grand coalition” is likely to come at the cost of ceding key ministries to her junior coalition partner, exposing the German chancellor to criticism from her own party.

The SPD leader, Martin Schulz, can be optimistic about rallying support for a new term in government after securing three influential trophy ministries. The draft coalition deal foresees the centre-left party filling the finance, foreign and labour ministries, as well as the roles for family, justice and the environment.

Schulz, who had ruled out playing a role in a Merkel government in the immediate aftermath of last year’s elections, is reportedly planning to hand his party leadership to the former labour minister Andrea Nahles and take charge of the foreign ministry himself.

The SPD mayor of Hamburg, Olaf Scholz, seen as a pragmatic centrist from the party’s liberal wing, is set to succeed the powerful Wolfgang Schäuble in the finance ministry, a key role for the future direction of the eurozone.

The draft coalition agreement hints at a departure from Schäuble’s hawkish focus on balanced budgets, promising a “solidaristic sharing of responsibilities” and a preparedness to increase German contributions to the EU budget.

At a press conference on Wednesday afternoon, Merkel said that divvying up ministries had “not been easy” and acknowledged her party’s disgruntlement at the loss of the finance ministry.

“I’d wager that the SPD didn’t even believe it could get the finance ministry when the negotiations started,” the veteran CDU politician Wolfgang Bosbach told German media on Wednesday. “The CDU should have insisted on keeping the positions it already had.”

A boosted interior ministry with an additional focus on housing construction and life in regional areas has meanwhile reportedly been handed to Horst Seehofer of the Bavaria-based CSU, the Christian Democrats’ sister party – a consistent critic of Merkel’s policy course during the refugee crisis.



Such a constellation would leave Merkel’s own party with only the roles for the economy, defence, health, education and agriculture, and no truly high-profile ministries apart from her own chancellory.

Quick Guide Germany's new 'homeland' ministry Show Germany's new cabinet may be made up of the same parties as last year, but it is set to include a minister with a novel new mission: a leaked draft of the coalition deal sees Bavarian politician Horst Seehofer in charge of a ministry responsible for interior affairs, construction... and heimat. A term without a direct equivalent in English, heimat can refer to one's homeland as well as a broader sense of a place with which one feels a spiritual affinity. Non-German speakers may recognise it from the title of Edgar Reitz's popular art-house soap opera. Politicians In post-war Germany have traditionally avoided the term for its association with folklore kitsch – until 2013, when the Bavarian CSU set up a “heimat ministry” in Nuremberg, supervised by the state's finance minister. The Bavarians' motive, it was believed, was to reclaim the language of national belonging from the rightwing populists – a move with limited success. Bavaria's heimat ministry has so far mainly focused on extending broadband coverage in regional areas. Since Horst Seehofer set up his first heimat ministry, his CSU party has lost ten percentage points in the polls to the far-right AfD. Photograph: Sean Gallup/Getty Images Europe

The coalition deal also complicates the question over who could eventually replace Merkel once she decides to step down. Two politicians recently mooted as potential successors, the young rightwinger Jens Spahn and the more liberal-leaning “mini-Merkel” Annegret Kramp-Karrenbauer, are not expected to play roles in the next government at all.

The CDU and the SPD have been in coalition talks since the first week of January after the collapse of Merkel’s attempt to form an unorthodox “Jamaica” coalition with the pro-business Free Democrats and the Green party.



Deadlocks over employment law and SPD-proposed reforms to the multi-payer health service resulted in the CDU and SPD missing several deadlines they had set themselves.



As the talks ran into Wednesday morning, the chancellor cancelled an official lunchtime meeting with Italy’s prime minister, Paolo Gentiloni.

Once the two parties have officially presented their coalition agreement, the SPD will allow their 460,000 members a vote on whether the party should formally enter a governing coalition with Merkel’s party.

Schulz, whose party has played junior partner to Merkel’s in the government for the past four years, initially ruled out the possibility of another grand coalition under his leadership.

The SPD’s leadership faces opposition from a number of groups, including its own youth wing, the Young Socialists, who believe it should reinvent itself in opposition rather than seek another term in government.

Only SPD members who joined the party before 6pm on Tuesday will be able to vote. At a special party summit in January, only a narrow majority of SPD delegates voted in favour of continuing coalition talks.

At the elections in September, the SPD plunged to its worst result since the second world war, winning just over 20%. And despite emerging as the strongest party, with 33%, the performance of Merkel’s CDU also disappointed supporters.

The Alternative für Deutschland’s role as the largest opposition party is a non-official one but it equips the party with a number of parliamentary privileges.

Migration emerged as a contentious political issue in Germany after 1.2 million people entered the country during the refugee crisis in 2015-16. The backlash against Merkel’s decision to keep open Germany’s borders resulted in a far-right party entering parliament for the first time in more than 50 years.