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.

Merkel, the German chancellor, and the Social Democrats’ (SPD) leader, Martin Schulz, on Friday morning recommended moving on to formal coalition negotiations after agreeing compromises on issues ranging from European integration via healthcare to migration quotas.

“We have realised that the world isn’t waiting for us,” Merkel said at a press conference on Friday morning. “We are convinced that Europe needs a fresh start and have developed the right ideas to go with it.”

“I believe we have reached outstanding results,” Schulz added.

Their optimism comes at the end of a period of rare political uncertainty, prompted by inconclusive federal election results in September. The collapse of talks to form an unorthodox “Jamaica” coalition between the CDU, the FDP and the Green party even led to speculation that Merkel would resign as she faced the prospect of leading a weakened minority government.

German media 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.

Under Germany’s multipayer healthcare system, employers and employees previously contributed an equal amount towards each person’s statutory sickness fund, but since the system was changed in 2005, people have increasingly had to shoulder additional payments.

In return, reports indicated the Bavarian sister party of Merkel’s CDU had succeeded in its goal to limit the number of family members who can be reunited with refugees that have been granted asylum in Germany.



A 28-page coalition paper, presented by Merkel as a “give-and-take” compromise, suggests family-reunification arrivals should be capped at 1,000 a month, and overall immigration be capped between 180,000 and 220,000 people.

The CSU leader, Horst Seehofer, who provoked Merkel’s ire last week by inviting Hungarian president Viktor Orban to a party gathering in Bavaria, said on Friday he was “very happy” that his initial optimism about the talks had been rewarded.

Christian Democrat and Social Democrat leaders also agreed to lower the tax surcharge, introduced to fund the reunification of east and west Germany, by €10bn (£9bn) by 2021.

The coalition paper states the next German government will be prepared to make higher contributions to the EU budget, as well as support “funds for economic convergence and social convergence and support of structural reforms that can be a starting point for future investment budget for eurozone”.

In a message which will be warmly received by the French president, Emmanuel Macron, Germany’s two large centrist parties stressed the need for more Franco-German cooperation: “The renewal of the EU will only succeed if Germany and France work towards it with all their strength.”

France gets six mentions in the paper, which will become a blueprint for further talks in the coming weeks, compared with three mentions for Turkey, two mentions for the US, one mention each for Russia and China, and no mention at all for the UK.

The French government spokesman, Benjamin Griveaux, welcomed the agreement, describing it as “important for the stability and future of Franco-German relations”.

While the paper emphasises that “Europe has to take its fate into its own hand more than before”, there are no specific targets for future military spending, nor any mention at all of Nato.

In the early stages of exploratory talks this week, it was reported Germany’s would-be coalition partners had agreed to drop plans to lower carbon dioxide emissions by 40% from 1990 levels by 2020.

Without additional measures, Germany will miss its 2020 emissions target, due to better than expected economic growth. The coalition paper foresees the new government drawing up a timetable for phasing out coal power by the end of this year.

Negotiation talks at the SPD headquarters in Berlin on Thursday night were accompanied by noisy protests from both climate change activists and workers in the country’s coal industry.

SPD delegates will vote on whether to move talks to the next stage at a party conference on 21 January. Even then, SPD leaders will still have to sell the coalition to their membership, and will face resistance from many MPs and supporters who believe another coalition with Merkel could prove an existential challenge to their party’s future.



“If Schulz and Seehofer both find the outcome of the talks ‘outstanding’, then at least one of them is wrong,” tweeted Kevin Kühnert, the chairperson of the SPD’s youth wing.

“A proverbial lick of paint, many promises, a lot of kludge,” said Marco Bülow, a leading MP on the left wing of the SPD. “This is not a fresh start, not even a standstill. The past has shown that the [Christian Democratic] Union will prevent progressive plans.”

If the SPD membership votes down the coalition treaty next month, Merkel’s only remaining options will be to form a minority government or to hold new elections.

The Social Democrats had initially ruled out another coalition with Merkel after poor results in the election on 24 September, but reconsidered after her talks with two other parties failed.