Image copyright AFP Image caption Angela Merkel and Martin Schulz stressed the need for social cohesion

German politicians have achieved a breakthrough in talks aimed at forming a new coalition government.

A blueprint for formal negotiations was agreed between Chancellor Angela Merkel's Christian Democrats (CDU) and their former coalition partners, the Social Democrats (SPD).

Politicians stayed up all night to discuss the 28-page document, with the talks lasting more than 24 hours.

But they managed to reach agreement on key sticking points such as migration.

They plan to limit asylum-seeker arrivals to about 200,000 annually. The blueprint also speaks of capping at 1,000 a month the number of migrants who will be allowed to join their family living in Germany.

Stress on 'social cohesion'

Mrs Merkel and SPD leader Martin Schulz told a news conference they were optimistic that a new "grand coalition" could be formed.

They spoke of a "fresh start" for Germany, and Mr Schulz said that in Europe "we are determined to deploy Germany's strength".

Both stressed the need to ensure Germany's "social cohesion", a veiled recognition of voter frustration with centrist politics, amid tensions over the influx of asylum seekers.

The September election saw the far-right Alternative for Germany (AfD) win 94 seats in parliament - a first for post-war Germany.

Both the CDU and SPD suffered their worst election results for more than 50 years.

Uneasy partnership

By Jenny Hill in Berlin

After a gruelling all-night session - fuelled by currywurst - Angela Merkel appears to have clinched the deal.

The breakthrough is no doubt a relief to the chancellor, who might have faced the prospect of fresh elections had the talks failed. But Mrs Merkel won't be cracking open the Sekt straight away.

These were just exploratory talks, aimed at establishing whether there's a basis upon which a coalition can be formally negotiated. Before the next round of talks can go ahead, the SPD must give the go-ahead at a special party conference.

Bear in mind that many in the SPD - which had originally refused to work with Mrs Merkel again - blame her for their disastrous election result, and are still uncomfortable about another four years in her shadow.

Even if they approve the negotiations, any coalition treaty will be put to the SPD's 400,000 members in a postal ballot. Mrs Merkel is not out of the woods yet.

German official figures show that 280,000 asylum seekers arrived in 2016, a drop of more than 600,000 on the total for 2015. Arrivals fell after EU countries and Turkey tightened border controls.

However, the number of asylum applications continued to rise in 2016. The huge 2015 influx - many of them Syrians, Iraqis and Afghans fleeing war - created a major integration problem for German authorities.

Stumbling blocks

The centre-right CDU and its Bavarian CSU ally have been unable to form a government since the inconclusive election.

The German daily Die Zeit published the text of the CDU/CSU-SPD blueprint for formal negotiations. Under a coalition the parties would seek to:

Crack down on tax avoidance in the EU, plugging tax loopholes exploited by US tech giants and other big corporations

Press for "equal pay for equal work" across the EU, to make the labour market fairer

Turn the European Stability Mechanism (ESM) - the main bailout fund - into a European Monetary Fund under parliamentary control

Seek joint policies with France on all major international issues

Create a centre for artificial intelligence with France

Adopt measures to reduce child poverty, strengthen equal rights for women and attract more foreign skilled workers to Germany

Promote renewable energy, so that it achieves a 65% share of power generation by 2030.

Initially the SPD ruled out governing with Mrs Merkel in charge again. But Mr Schulz changed his mind after CDU coalition talks with the liberal Free Democrats (FDP) and Greens broke down.

It is Germany's longest ever post-war period of coalition-building and there is still a long way to go before a coalition deal can be clinched.

The SPD will hold a special congress in Bonn on 21 January to decide how to proceed.</s>BERLIN (Reuters) - German Social Democrats sounded downbeat about their coalition talks with Chancellor Angela Merkel’s conservatives on Wednesday, a day before both camps decide whether they want to move to formal negotiations on establishing a new government.

Merkel, weakened by an election setback in September, turned to the left-leaning Social Democrats (SPD) to seek a re-run of their so-called “grand coalition” after the collapse in November of talks on a three-way coalition untested at national level.

The chancellor, who has won widespread respect abroad in more than 12 years in power, needs the coalition talks to succeed in order to avoid her personal authority being further undermined and Germany’s international standing diminished.

The Social Democrats know this, and are playing hard ball.

“The mood is like the weather,” Ralf Stegner, one of the SPD’s deputy leaders, said as he gazed at the cloudy sky above Berlin ahead of Wednesday’s talks.

As Europe’s largest economy and pre-eminent power broker, Germany is crucial to the region’s fortunes. Berlin’s partners are eagerly awaiting a new German government to help drive forward Brexit talks, euro zone reform and EU diplomatic initiatives.

Senior officials from the SPD, Merkel’s Christian Democrats (CDU) and their Bavarian sister party, the Christian Social Union (CSU), have been holding exploratory talks this week on whether to pursue formal coalition negotiations.

The talks are due to conclude on Thursday, before SPD leaders recommend to their members whether they should shift into official negotiations.

“We have a lot of work ahead of us today and tomorrow,” said conservative Finance Minister Peter Altmaier.

Participants have described the negotiations as “good”, but SPD leaders need to convince their party members as they are offering them a vote on Jan. 21 on whether to proceed.

The leader of the Jusos youth branch of the SPD told broadcaster ARD that a deal between the coalition negotiators to drop plans to lower carbon dioxide emissions by 40 percent from 1990 levels by 2020 “was not a good start to these talks”.

Merkel has ruled with the SPD in a sometimes unwieldy “grand coalition” in two of her three previous terms in office, including in the last parliament from 2013-2017. But both parties bled support in the Sept. 24 election, which saw the far-right Alternative for Germany (AfD) enter the Bundestag (national parliament) for the first time.

Many in the SPD rank-and-file oppose a repeat of the grand coalition as they fear it will further diminish the identity of the party, which suffered its worst result in September’s vote since 1933. Some SPD members are also concerned that a new grand coalition would make the AfD the main opposition party.

Despite such reticence, German media reported on Tuesday that conservative and SPD negotiators had reached agreement on a law to attract skilled immigrants.

Should the two biggest party groups fail to agree on moving ahead, Merkel could try to form a minority government or Germany could face new elections.

President Frank-Walter Steinmeier, eager to broker a deal, is keenly aware that the source of Germany’s international clout is its economic might and that businesses want a stable coalition soon to end the uncertainty and avoid another vote.</s>Chancellor Angela Merkel said her conservatives reached a breakthrough deal Friday with Germany's second biggest party, the Social Democrats, toward building a new coalition government that would give Europe a "fresh start".

After more than 24 hours of talks and months of political paralysis, red-eyed party chiefs and their negotiating teams reached an in-principle agreement to start formal coalition talks that could lead in coming months to a new government for the biggest EU economy.

In the all-night negotiations in Berlin, Merkel and her Christian Democrats, Horst Seehofer of her Bavarian allies the CSU and the Social Democrats (SPD) chief Martin Schulz hammered out a 28-page paper that will form the basis for the talks ahead.

The hope was to form a new government "before Easter", which falls on April 1, said Seehofer.

In their joint blueprint, the three parties agreed on key policy outlines -- to join EU partner France in a push to "strengthen and reform" the 19-member eurozone, to limit the controversial influx of asylum seekers to Germany to around 200,000 a year, and to refrain from tax hikes given the healthy state of state coffers.

Merkel voiced relief that the parties had passed a milestone, telling a press conference that "the world is not waiting for us -- we need a fresh start in Europe. A fresh start for Europe is also a fresh start for Germany."

European Commission president Jean-Claude Juncker said the German deal was "significant" and "positive" for the EU's future.

Despite the deal, potential pitfalls remain, including upcoming votes by sceptical SPD delegates and then party members that could yet derail plans for another left-right "grand coalition", the constellation that has ruled Germany for the past four years and remains in charge as a caretaker government.

Germany has been in political limbo since a September 24th election in which Merkel failed to win a clear majority - in part due to the rise of the far-right and anti-immigration Alternative for Germany (AfD) which took millions of votes from all major parties.

Merkel initially turned to two smaller parties, the Free Democrats and Greens, to form a new coalition government for her fourth term. But when those talks collapsed in November, she had to once more woo a reluctant SPD for a new power pact.

Both Merkel and Schulz went into the talks Thursday warning of "big obstacles" ahead, but also knowing that their political lives were on the line.

"The negotiations are not just about a coalition, but also their careers," said Karl-Rudolf Korte of Duisburg-Essen University. "It would be the end for all three if this coalition does not come about."

In the tough talks, all sides have been under pressure to deliver some of their parties' signature policies.

A key SPD position was reflected in a pledge that Germany would, "in close partnership with France, sustainably strengthen and reform the eurozone so that the euro can better withstand global crises".

But the party failed with a demand to raise taxes for the very rich.

The embattled mainstream parties have also struggled to fend off the encroaching far right, which has seized on anger over a mass influx of more than one million migrants and refugees since 2015.

Roughly in line with a core CSU demand, they agreed that "the number of new arrivals... should not exceed the range of 180,000 to 220,000 per year".

A new coalition deal can still be torpedoed when SPD delegates, and later rank-and-file members, get to vote on whether the party should once again govern in Merkel's shadow.

Scepticism is high after the SPD scored a humiliating result in September, its worst of the post-war era. That initially led Schulz to vow to head into opposition to rebuild the party's fighting spirit and voter appeal.

The SPD's youth wing chief Kevin Kühnert has said he would embark on a national tour to press his case against a new grand coalition, known as "GroKo" in German political shorthand.

"The mood of the party rank-and-file with regards to a grand coalition is still grim. That's why I think we have a good chance," said Kühnert.

Opinion polls suggest most Germans are less than enthusiastic about a new conservative-SPD alliance, with a Focus magazine survey giving it just 30 percent support.

Political observers also judge that Merkel, damaged by the poor election outcome, is now in the twilight phase of her reign.

"Angela Merkel is past her zenith," Oskar Niedermayer of Berlin's Free University told business daily Handelsblatt.

"In the interest of her party's electoral strength, she should not stay in office for the entire legislative term."</s>The Social Democrats (SPD), Christian Democrats (CDU) and their Bavarian counterparts, the Christian Social Union (CSU) had given themselves five days to discover whether there was enough common ground to start coalition talks. On the final day, and after more than 24 hours of huddling together, they appear to have stuck to their word.

Sources close to the talks announced Friday morning that a blueprint was in place that would allow for more detailed talks on forming another so-called grand coalition to take place.

While the news certainly bolsters the chances of Germany finally forming a new government after months of uncertainty, it's not a done deal yet.

Martin Schulz, the leader of the SPD, now has to make good on his promise and let the party's grassroots vote next week on whether the blueprint reflects enough of an SPD thumbprint that party members could live with.

How did we get here?

After the CDU/CSU outperformed the SPD in Germany's September 24 national election, Merkel was charged with forming a government, while Schulz declared that the Social Democrats would go into the opposition. But the breakdown of talks to form a three-way coalition between conservatives, the center-right business-friendly Free Democratic Party and the Greens (FDP) put the grand coalition back on the table as the only other realistic chance for a parliamentary majority.

Read more - The pros and cons of a grand coalition

That put Schulz in a bind. Having categorically ruled out another grand coalition and under pressure from the party's leadership, Schulz had to find a way to change tack without losing face. At a party conference in December, Schulz managed to secure secure support, albeit reluctantly, from the party faithful to enter exploratory talks with the caveat that a final decision would be voted on again by party members.

What do the two parties agree upon?

There is broad consensus between conservatives and Social Democrats on foreign policy and the European Union. Angela Merkel is a committed European, and conservatives have no problem with Social Democratic Foreign Minister Sigmar Gabriel, who would be more than happy to stay on in that post. The issue of refugees was viewed as a potential deal-breaker, although the SPD and the conservatives would have to hammer out a compromise on a hard cap on the number of refugees Germany accepts annually and on whether family members have a right to come join all refugees.

Otherwise, the two sides could likely reach consensus about popular initiatives like investing more in education, hiring more police officers and improving Germany's mediocre digital infrastructure. A law governing immigration to Germany would be within the realm of possibility, too.

What were some major points of conflict?

Merkel had said that "economic growth" should be at the core of potential coalition talks, while Schulz made "social equity" the focus of his unsuccessful campaign to unseat the chancellor. Those are the basic contours of the core disagreements between the two parties, as two examples illustrate.

The Social Democrats have floated the idea of unified health insurance for all, co-financed by employers and employees. That hasn't gone down well with privately insured people, and conservatives hate the idea.

The CDU/CSU favors using surplus state revenues to finance a broad-based tax cut, but the Social Democrats want to see any tax relief targeted at low- to middle-income Germans and favor raising the inheritance tax and the uppermost income tax rates.

The biggest winner in a new grand coalition would be Angela Merkel. She's already headed two grand coalitions in her 12-plus years of governing, and what she mainly wants at present is to form a stable government.

For her parliamentary group, the CDU/CSU, another spell with the Social Democrats would be a dubious blessing. The conservatives would be again the senior partners in the government, but they also recorded their worst election results in decades in September — perhaps in part because Merkel has moved them so far to the left.

Arguably, the Social Democrats would again come out the "losers" of such an arrangement. The SPD's share of the vote has declined every time after they've done deals with the conservatives, and it's hard to see them recovering after another stint as Merkel's junior partners.

Does this mean it's a done deal?

Given the protracted state of limbo, don't take anything for granted. As mentioned above, the SPD's party members could throw a spanner in the works. There's also no guarantee that the actual coalition talks reach a happy end.

In that event, the two remaining options are a snap election or a conservative-led minority government tolerated by the Social Democrats.

With the popularity of Germany's two biggest parties declining, the disadvantages of a new vote for them are obvious. The fear is that the far-right populist Alternative for Germany (AfD) party would emerge stronger if Germans went back to the polls.

A conservative-led minority government would mean that the CDU/CSU would have to seek partners for every bit of legislation it wanted to enact. Hardly a stable situation.

The Social Democrats would be in the opposition, but they would also be caught in a dilemma. The more government initiatives they tolerated, the more they would be open to accusations of pursuing a grand coalition in everything but name. The more government measures they refused to support, the more they could be charged with obstructionism. Hardly an enviable situation.</s>BERLIN (Reuters) - German Chancellor Angela Merkel wants to conclude negotiations with the Social Democrats (SPD) on forming a coalition government by mid-February, a source in her conservative party said on Friday.

The goal is to give the SPD ample time to hold a postal vote among its members on the coalition agreement with Merkel's Christian Democrats (CDU) and their Christian Social Union (CSU) Bavaria-based allies.

Merkel's conservatives had said they want to have a government in place by the end of March.</s>Party chiefs reached an in-principle deal to start formal coalition talks that could lead to a new government

German Chancellor Angela Merkel’s conservatives reached a “breakthrough” deal Friday with the country’s second biggest party, the Social Democrats, toward building a new coalition government, sources close to the negotiations said.

After more than 24 hours of talks, party chiefs reached an in-principle deal to start formal coalition talks that could lead in the coming months to a new government for the biggest EU economy, the sources told AFP.

In the all-night talks in Berlin, the party chiefs -Merkel of the Christian Democrats as well as Social Democrats (SPD) leader Martin Schulz and the head of Merkel’s Bavarian allies, Horst Seehofer- and their negotiators hammered out a 28-page joint paper that will form the basis for the talks ahead.

Potential pitfalls remain, including votes by sceptical SPD delegates and later the labour party’s rank-and-file members that could yet give the thumbs down to another left-right “grand coalition”, the constellation that has ruled Germany for the past four years.

Germany has been in political paralysis since a September 24 election in which Merkel failed to win a clear majority – in part due to the rise of the right-wing and anti-immigration Alternative for Germany (AfD) which took millions of votes from all major parties.

Merkel initially turned to two smaller parties, the Free Democrats and Greens, to form a new coalition government for her forth term, but when those talks collapsed in November, she had to once more woo a reluctant SPD for a new power pact.

Both Merkel and Schulz went into the talks Thursday warning of “big obstacles” ahead, and major sticking points in the red-eye negotiations that followed were immigration, finances and health policy, sources said.

Everything was at stake for Merkel and the other party leaders in the marathon talks.

“The negotiations are not just about a coalition, but also their careers,” said Karl-Rudolf Korte of Duisburg-Essen University. “It would be the end for all three if this coalition does not come about.”

Germany’s rude economic health has stood in stark contrast to the political paralysis which has entered a fourth month, with Merkel currently running a caretaker government.

In fact the political talks were tripped up by the country’s strong finances, as parties had opposing views on how to spend the cash.

The SPD, seeking to push its social welfare agenda, is demanding greater relief for the lower and middle income brackets and tax hikes for top earners, while the conservatives had campaigned with a promise of “tax cuts for all”.

The embattled mainstream parties are also struggling to fend off the encroaching right, which has seized on anger and fears over a mass influx of refugees and netted a record showing at the September poll.

To halt a hemorrhage to the AfD, Merkel’s alliance wants a tougher stance on immigration, something that is hard to sell to the SPD.

A new coalition deal can still be torpedoed when SPD delegates, and later rank-and-file members, get to vote on whether the party should once again govern in Merkel’s shadow.

Scepticism is high after the SPD scored a humiliating result in September.

The SPD’s youth wing chief Kevin Kuehnert has vowed to embark on a national tour to press his case to opposing a new grand coalition before a September 21 party congress.

“The mood of the party rank and file with regards to a grand coalition is still grim. That’s why I think we have a good chance,” said Kuehnert.

Opinion polls suggest most Germans are less than enthusiastic about a new conservative-SPD alliance.

A survey published by Focus magazine found that only 30 percent of Germans favour a return of the grand coalition, while 34 percent prefer new elections.

Another poll published by public broadcaster ARD found that only 45 percent viewed a new grand coalition positively, while 52 percent did not.</s>* But SPD party delegates must first back plan

BERLIN, Jan 12 (Reuters) - Angela Merkel has survived as German chancellor but the coalition deal she clinched on Friday puts her fate in the hands of her Social Democrat (SPD) partners and risks eroding support from her close allies before the end of her fourth term.

Europe’s pre-eminent leader for more than 12 years, Merkel’s star is waning as she pays for her 2015 decision to leave German borders open to over a million refugees, a move that cost her Christian Democrats votes and fuelled the rise of the far-right.

After the collapse of talks in November to form a three-way coalition with the liberal Free Democrats and Greens, Merkel and her conservative Bavarian Christian Social Union (CSU) allies were forced to turn again to the left-leaning SPD.

Merkel’s immediate destiny now lies in the hands of rank-and-file Social Democrats whose party leaders will ask them on Jan. 21 to back Friday’s deal, a repeat of the grand coalition that governed from 2013 to 2017.

The chancellor, who still commands wide respect abroad, needed the talks to succeed to avoid further erosion of her authority, after losing ground in September elections, and the weakening of German influence, not least in the European Union.

An Infratest Dimap poll for broadcaster ARD published last week showed Merkel’s personal approval had dropped 2 percentage points from a month earlier to 52 percent.

To win over the SPD, Merkel agreed to 5.95 billion euros ($7.2 billion) of investment in education, research and digitalisation by 2021, expanded child care rights, and a pledge to strengthen Europe’s cohesion with increased German contributions to the EU budget.

The investment is a small proportion of the extra 45 billion euros the government will have at its disposal for the next four years and for many in the SPD, the deal did not go far enough on cherished social justice issues.

The leader of the SPD’s more radical Berlin branch, Michael Mueller, said commitments on affordable housing were inadequate.

“Living cannot be allowed to be a luxury,” he said.

Friday’s 28-page coalition blueprint also failed to convince Marcel Fratzscher, head of the DIW economic research institute and an advocate of stronger investment in Germany, who said “a clear vision and courageous reforms are lacking”.

Even if SPD delegates do back the coalition agreement, negotiations on forming a government could still fail.

Describing the deal clinched after a 25-hour meeting as a “give and take” agreement, Merkel said much hard work remained before a full coalition could be formed.

“The coalition negotiations probably won’t be easier than the exploratory talks,” she told a joint news conference with CSU leader Horst Seehofer and SPD leader Martin Schulz.

Mujtaba Rahman of political consultancy Eurasia assigned a 35 percent probability to coalition negotiations failing and leading to an early election or a minority government.

“There are still multiple risks to an overall agreement,” he said. “There is still a risk, even in a scenario where Merkel is able to form a government, that she will not be able to fulfil her complete term.”

Conservatives, though, were pleased Friday’s coalition blueprint omitted a call from the SPD’s Schulz for a “United States of Europe” by 2025.

“It is welcome that the goal of a United States of Europe, which sounds great and which perhaps sometime in the future can be a long-term objective, is not included in this coalition agreement,” said Detlef Seif, the deputy EU spokesman for Merkel’s conservative parliamentary bloc.

A commitment to “sustainably strengthen and reform the euro zone” in close partnership with France does give Merkel scope to secure her legacy as a guardian of the European project.

However, beyond boosting Germany’s EU budget contribution and transforming the European Stability Mechanism that can bailout member states into a European Monetary Fund, the blueprint is short of specifics on Europe.

Fiscally conservative members of Merkel’s Christian Democrats are wary of France pushing Berlin into European reforms at increased cost to the German taxpayer.

Carsten Nickel, deputy research director at advisory firm Teneo Intelligence, said of Merkel’s centrist strategy: “The real challenge has always been to sell this logic internally.”

That Merkel has been able to survive as chancellor is partly due to the absence of a natural successor.

Though a challenger has yet to come forward, impatience is growing in Christian Democrat ranks about Merkel’s tendency to manage crises as they arise rather than presenting a vision the party can rally behind and sell to voters.

Her message during campaigning for September’s election was simply “don’t experiment” with a shift to the political left - a narrative that failed to resonate with voters, who handed her conservatives their worst result since 1949.

“The conversation has now moved on,” said Eurasia’s Rahman. “There is a lot of active consideration being given to the post-Merkel era.”</s>The Christian Democratic Union (CDU), the Christian Social Union (CSU) in Bavaria and the Social Democratic Party of Germany (SPD) have reached a breakthrough in coalition talks on the formation of the country's government, the Reuters news agency reported, citing its sources.

After the CDU/CSU bloc failed to form a government with the Greens and the Free Democratic Party, they counted on the coalition with the SPD, which had initially refused to participate in it, but then changed their position on the matter.

READ MORE: 'It Will Be a Hard Day': Merkel on Stalled Government Coalition Talks

As the SPD leader Martin Schulz has revealed during the talks, lasting from January 7 till 11, the sides had set up a good foundation for the upcoming preliminary talks.

The hard situation in forming a government is connected to the German Free Democratic Party's (FDP) decision to withdraw from the coalition talks with the CDU/CSU and the Greens in on November 20, 2017. As a result of this move, if the coalition talks fail, the remaining options for Merkel will be snap elections or a minority government.

READ MORE: German Chancellor Merkel to Reveal Her Plans on Forming Government in 2018</s>German Chancellor Angela Merkel, Bavaria's Horst Seehofer and lead Social Democrat Martin Schulz have recommended the opening of formal next-stage negotiations on a possible "grand coalition."

Merkel told a Berlin news conference that the participants in exploratory talks — underway since Sunday — had overcome their reservations.

Schulz said all 13 Social Democrat (SPD) negotiators had endorsed the preliminary deal. "Excellent results" had been achieved, he said.

The draft policy document — texted by potential coalition intermediaries meeting overnight at SPD party headquarters in Berlin — spanned 28 pages, reported DPA.

A "breakthrough" had also earlier been reported by Germany's parliamentary television channel Phoenix, adding that amendments to the text had been sought, especially among the SPD.

Some details have emerged from the draft copy, with DPA reporting that the sides had agreed to keep the top tax rate at 42 percent rather than raising it to 45 percent as wanted by the Social Democrats.

An agreement was also reportedly reached 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.

Draft elements also include "full employment," boosted housing schemes, a law allowing skilled labor immigration, a nationwide support scheme for Germany's poorly developed regions, stabilized pensions — notably for low earners such as mothers, and electricity delivery based on 65 percent on renewable sources by 2030.

Germany, which voted on September 24, has been in limbo at federal government level since November's collapse of exploratory talks, cancelled by the liberal Free Democrats (FDP), which had been negotiating with Merkel and the Greens.

A caretaker federal government led by Merkel is still in place.

The recommendation by Schulz to form a "grand coalition" will be put before an SPD party conference in Bonn on 21 January for a final decision. After the September elections, Schulz initially rejected the idea of a renewed coalition partnership with Merkel's conservatives.

The last phase of exploratory talks, spanning 24 hours from Thursday into Friday, reportedly centered on how to fund various tax, social welfare and health initiatives.

They were priced at more than double the €45 billion euros ($54 billion) available to be spread over a four-year government term, according to DPA.

The 39 negotiators - 13 from each party - had begun the exploratory talks last Sunday.

Their aim had been to hash out policy alignments before deciding to commit to formal coalition talks between Merkel's Christian Democrats, Seehofer's conservative Bavarian Christian Social Union and Schulz' center-left Social Democrats.</s>BERLIN - German politicians have achieved a breakthrough in talks aimed at forming a new coalition government, reported BBC News.

A blueprint for formal negotiations was agreed between Chancellor Angela Merkel's Christian Democrats (CDU) and their former coalition partners, the Social Democrats (SPD).

Politicians stayed up all night to discuss the 28-page document, with the talks lasting more than 24 hours.

Dr Merkel and SPD leader Martin Schulz told a news conference they were optimistic that a new "grand coalition" could be formed, reported BBC News.

They spoke of a "fresh start" for Germany, and Mr Schulz said that in Europe, "we are determined to deploy Germany's strength". They signalled that a stronger alliance with France in the European Union would be a priority.

Dr Merkel wants to conclude negotiations on forming a coalition government by mid-February, a source in her conservative party said on Friday (Jan 12).

The goal is to give the SPD ample time to hold a postal vote among its members on the coalition agreement with Dr Merkel’s CDU and their Christian Social Union (CSU) Bavaria-based allies. Dr Merkel’s conservatives had said they want to have a government in place by the end of March.

The SPD, Germany's second-largest party, said in a statement on Friday that its 45-member board had overwhelmingly given its blessing to formal coalition negotiations with Dr Merkel's conservatives following a deal in principle sealed earlier in the day, reported Agence France-Presse.

The draft programme, outlining policy goals during Dr Merkel's fourth term, must now be approved by 600 SPD delegates at a party congress on Jan 21 and then by the party's more than 400,000 rank-and-file members.
The CDU/CSU (Christian Democrats) and SPD (Social Democrats) agree on a blueprint for formal negotiations on a new "grand coalition" government after the September 2017 federal election.