The prospect of early elections or a minority government in Germany has increased after leading politicians in the conservative Christian Democrats (CDU) dismissed demands by the new leftwing leadership duo of their junior coalition partner to renegotiate the terms of their alliance.

Annegret Kramp-Karrenbauer, the head of the Christian Democrats (CDU), said the coalition deal with the Social Democrats (SPD) would either stay intact or the SPD would have to leave the government. It represented a challenge to the SPD’s new co-leaders, Saskia Esken and Norbert Walter-Borjans, to decide whether or not they wanted to remain in power.

“We are not a therapy outfit for the respective coalition government parties,” she told the German public broadcaster ZDF.

Profile Norbert Walter-Borjans and Saskia Esken Show Norbert Walter-Borjans The 67-year-old political economist who joined the SPD at the age of 31, has sometimes been referred to as Germany's Bernie Sanders for his insistence that the SPD must lead the country out of the "neoliberal wilderness". He has said the SPD had drifted into believing that lower taxes and VAT rises were the best way to run the country, and he would look to reverse this thinking, in the unlikely event he was elected co-leader. The father of four who paints and sculpts in his spare time, earned a reputation as a risk taker willing to take on the rich and powerful during his time as finance minister in North-Rhine Westphalia, Germany´s most populous state, when he paid €19 million for CDs containing whistleblower's data on thousands of Swiss bank clients. The move prompted tens of thousands to voluntarily pay back €7.2bn in unpaid taxes. In an interview with the Guardian last month, Walter-Borjans - often referred to as NoWaBo for short - said the country was in need of a large amount of investment and that he would rather Germany abandoned its commitment to balancing the federal budget, the so-called "black zero", to free up money for this. "If the economy does indeed enter a downturn then we will need to make massive investments. Because our infrastructure is not in a good state, and nor is our digital infrastructure nor our schools. We have to question the black zero.” Saskia Esken The 58-year-old from Baden-Württemberg is even less well known than her male counterpart. She joined the SPD at the age of 29, and has been in the Bundestag since 2013, taking a clear left-wing position, and like Walter-Borjans also critical of the SPD´s "neoliberal" politics under Gerhard Schröder, and voting against a tightening of the government's extradition policy, but has largely remained low-profile. Married with three children, she counts among her hobbies woodland walks with her dog, as well as music and literature. During the campaign as well as criticising the grand coalition, she made a particular point of stressing the need for reform of the European Union including introducing a Union-wide fiscal policy including cracking down on tax evasion. Photograph: Axel Schmidt/AFP

The government of Angela Merkel was committed to the coalition agreement that took six months to negotiate in 2017, Kramp-Karrenbauer said. “That’s what we’re concentrating on, and not on the sensitivities of the one or other coalition partner.”

Esken and Walter-Borjans secured first place in an SPD leadership vote on Saturday, on the back of a campaign centred largely on their opposition to the SPD’s participation in the coalition as it stands. Many in the party believe that governing in Merkel’s shadow has contributed to its poor showings in regional and European elections this year.

The SPD, which will officially appoint the new leaders at its party conference in Berlin on Friday, must now decide the direction it wants to take.

Esken and Walter-Borjans have also called for a move away from what they called the SPD’s neoliberal policies and for greater stress to be put on social justice. Among their demands are for the government to abandon its policy of sticking to a balanced budget, known as the “black zero”, and to invest €500bn (£430bn) in infrastructure, social welfare and tackling the climate emergency. They would also like to see a rise in the minimum wage from €9 to €12.

Norbert Walter-Borjans and Saskia Esken after they were announced as the new SPD leaders on Saturday.. Photograph: Action Press/REX/Shutterstock

If the SPD abandons the government, Germany will either face new elections or the CDU will continue ruling as a minority government.

Analysts have dismissed an initial suggestion that the CDU and its Bavarian sister party, the Christian Social Union (CSU), might try to reignite plans for a “Jamaica” coalition with the pro-business Free Democrats (FDP) and the Greens. So-called because the parties’ colours resemble those of the Jamaican flag, the coalition had been on the brink of being realised in 2017 before the FDP pulled out.

Riding high in the polls, the Green party would benefit more from new elections, and the FDP has long since ruled out governing with Merkel.

Markus Söder of the CSU said a coalition worked only if its partners communicated with each other, but “just because a party leader has been changed, this is no grounds for changing a coalition agreement … especially not if the demands made are purely ideologically motivated, and serve simply to cushion the blow of an election”.

Appealing to SPD members to stay in the government, he said: “We’ve reached half-time. And which team leaves the pitch after half-time?”

Steffen Seibert, a spokesman for Merkel, said she was prepared to talk to the SPD’s leaders, but rejected the idea of renegotiating the coalition deal. “The chancellor is principally ready for cooperation and a conversation, just as is usual in a coalition,” Seibert said.

Merkel, who has been Germany’s leader since 2005, has said she will not stand for another term. Early elections could therefore spell the premature end of her time as chancellor.

Esken and Walter-Borjans have faced the cameras on a range of prime-time political chatshows since their election on Saturday. Esken carefully avoided saying specifically whether the SPD would make official its threat to withdraw from the government. But she said she hoped the other side would be willing to talk. “It must be clear that there’s a readiness to talk,” she said, adding that it would then be “up to the party base to decide the result”.

Walter-Borjans was more forthright, saying the party had to be ready to walk away. “If the coalition partner takes the attitude to block new tasks, then the decision needs to be that it cannot go on.,” he said.

The SPD’s fiscal policymaker, Johannes Kahrs, said he believed the grand coalition would stay intact because it was for the good of the country. “I believe that both sides know that they must come to sensible results for this country,” he told the broadcaster Deutschlandfunk.

Carsten Linnemann, a CDU MP and head of the Mittelstands-Union, an association representing the interests of small to medium-sized businesses, which form the core of the German economy, warned against making too many concessions to the SPD. He rejected the party’s demands to abandon the “black zero”, saying: “If we go along with these demands, this would massively damage the CDU.”

Oskar Lafontaine, a former SPD leader and finance minister, predicted the party’s demise if it did not leave the government. Lafontaine turned his back on the party in 1999 in protest at the labour market reforms of his successor, Gerhard Schröder, which many leftwing members of the party say is the main reason for the SPD’s loss of voter support.

“If they continue to work with the CDU, they will collapse,” Lafontaine, who now represents the leftwing Die Linke party in Saarland, told Spiegel. The new SPD leaders, he said, had the chance “to commit to a politics in which social justice and peace are at the heart”.