Germany's next government is about to take another big step toward completion, with a coalition deal set to be announced imminently after almost two months of talks following the country's federal election in September.
As no one party gained a big enough share of the votes to govern alone, coalition talks have been taking place between the center-left Social Democratic Party, the Green Party and pro-business Free Democratic Party to try to find a compromise that would allow the parties to govern together.
The possible alliance has been described as a "traffic light" coalition in reference to the parties' traditional colors.
Now, after almost two months of talks which have been widely described by the parties involved as "constructive," it looks like a coalition deal will be announced on Tuesday or Wednesday.
Olaf Scholz, the SPD's candidate, is set to be Germany's next chancellor while Christian Lindner, the head of the FDP, is set to be the next finance minister, according to two people close to the coalition discussions who wanted to remain anonymous due to the sensitive nature of the talks.
The Green Party's co-leaders, Annalena Baerbock and Robert Habeck, are poised to take on the roles of foreign minister and economy minister, respectively, the same sources said.
As for the policies the coalition will adopt, Robin Arens, associate at Bernstein, told CNBC on Tuesday that the devil would be in the detail.
"It'll be interesting to see how ... this will all unfold and how detailed this agreement will be, and what the coalition agreement will look like in the end, besides the cabinet members," he said.
The expectation that Christian Lindner will be Germany's next finance minister means that there might have to be compromises in terms of the ambitious spending plans envisaged by the Greens and SPD aimed at transforming Germany's economy into a greener and digitalized one.
"Lindner will have to make compromises, the Liberals will have to make compromises, on how to finance the green revolution or the rebuilding of the German economy. We will see how this will unfold. It also depends on the developments around Covid and any financial aid the government has to put in place this winter. So there's a pretty complex situation at the moment."
Germany's long-standing chancellor, Angela Merkel, is stepping down from the role in the next few weeks after 16 years in office, marking a significant change in Germany's political landscape.
Her party, the Christian Democratic Union (CDU) and its sister party, the Christian Social Union, have been largely left out in the cold during coalition talks following the election.
The CDU and CSU have been dominant in German coalitions for decades but will now find themselves in opposition after the alliance's candidate for chancellor, Armin Laschet, failed to inspire voters. Laschet stepped down as state premier of North Rhine-Westphalia and is expected to be replaced as head of the CDU.
Scholz is a seasoned politician, having been the country's finance minister in Merkel's last government and Germany's vice chancellor.
