Chancellor Angela Merkel's conservative CDU/CSU bloc and Social Democrats (SPD) met for a fourth round of coalition talks yesterday, a day before both camps decide whether they want to move to formal negotiations on establishing a new government.
German Chancellor and leader of German Christian Democratic Union (CDU) Angela Merkel (C), leader of German Christian Social Union (CSU) Horst Seehofer (L) and leader of German Social Democratic Party (SPD) Martin Schulz pose for photos after a joint press conference at the headquarters of SPD, in Berlin, Germany, on January 12, 2018.
"She is tasked with putting together a government, and she hasn't done it", said Thomas Kleine-Brockhoff, director of the Berlin office of the German Marshall Fund and a former presidential adviser.
Details were to be announced later Friday, but according to a draft copy the sides agreed to keep the top tax rate at 42 percent rather than raise it to 45 as the Social Democrats had wanted, and to limit the number of migrant family members who will be allowed to join asylum seekers in Germany, as well as the overall number of migrants allowed in the country each year, the dpa news agency reported.
"We need more Europe and from what I saw of the provisional deal it acknowledges that".
Sources said both parties had also agreed that the share of renewable energy in Germany's electricity consumption should rise to 65 percent by 2030 from roughly a third a year ago.
On the economic front, Germany's Ministry of Finance said factory orders declined by 0.4% on the month in November (consensus: 0.0%).
A grand coalition would also leave the controversial Alternative for Germany as the lead opposition party in parliament.
After all, there is little appetite for a new conservative-SPD alliance.
Merkel will be meeting in a series of talks with SPD leader Martin Schulz until Thursday.
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"It would be the end for all three if this coalition does not come about", said Karl-Rudolf Korte of Duisburg-Essen University.
The deal reached by Merkel and the SPD on Friday pledges close cooperation with France on strengthening the euro zone, in Berlin's first substantive response to Macron's proposals.
SPD leader Martin Schulz has vowed to put any agreement with the conservatives up for a vote by party members, many of whom are opposed to another coalition of the two largest parties in parliament.
Scepticism is high after the SPD scored a humiliating 20.5-percent result in the September ballot, its worst of the post-war era.
On Friday, he defended his and other SPD leaders' 180-degree turn.
The SPD's youth wing chief Kevin Kuehnert told Zeit Online that he would embark on a national tour to press his case for opposing a new grand coalition before a September 21 party congress.
He said the terms of the deal were "more favorable" for his vision of a reformed EU than a separate agreement that was discussed and abandoned between the Union and the pro-business Free Democratic Party (FDP) in November a year ago.
That Merkel has been able to survive as chancellor is partly due to the absence of a natural successor.
Angela Merkel is heading into the final day of make-or-break negotiations to determine her future as Germany's leader. "So the question, for instance, will be whether she will stay for the whole term or whether she will actually build a successor and hand over to that person".