BERLIN • German Chancellor Angela Merkel's conservatives and the Social Democrats (SPD) sealed a deal yesterday on a new coalition, officials close to the talks said, potentially ending four months of political standstill in Europe's top economy.
"We have a coalition agreement that will do a lot of positive things for a lot of citizens," Dr Merkel's chief of staff and acting finance minister Peter Altmaier told reporters after he emerged from more than 24 hours of often contentious talks.
According to people familiar with the talks, the SPD will get the finance, foreign and labour ministries. German media said Dr Merkel's Christian Democrats (CDU) will fill the defence and economy posts, and the CDU's Bavarian sister party Christian Social Union will get the interior ministry.
The DPA newswire reported that Hamburg Mayor Olaf Scholz will become finance minister.
The deal was worked out by a core of about 15 leaders, and must now be approved by a broader group of roughly 90.
The breakthrough will come as a relief to Germany's European Union partners as the bloc faces tough negotiations on migration and Brexit.
Dr Merkel, Europe's most experienced leader, has seen her standing at home and abroad weakened by the longest stretch of coalition-building in the country's postwar history.
The agreement for a renewed "grand coalition" comes after days of marathon talks in which negotiators from all three parties haggled over everything from foreign policy to labour issues to healthcare.
Germany has been stuck in political limbo since September's inconclusive general election saw mainstream parties bleed support to the far-right AfD, which tapped into anger over Dr Merkel's liberal refugee policy.
Dr Merkel's fate now lies in the hands of the SPD, as its leader Martin Schulz has promised to give his party's 460,000 members the final say on whether to accept the coalition pact.
Observers expect the referendum to be tight, with the SPD's left and youth wings fiercely opposed to another four years governing in Dr Merkel's shadow. The referendum will be held by postal ballot, with the result expected to be announced early next month.
While details of the final agreement have yet to be released, former European Parliament chief Schulz has put a fairer Europe at the heart of his efforts, insisting that Berlin must join French President Emmanuel Macron's push to deepen euro zone integration.
AGENCE FRANCE-PRESSE, BLOOMBERG
