Agreement reached on basis for negotiating new German govt coalition - lawmakers

The Latest Euro jumps on positive news from German talks

German Chancellor Angela Merkel's conservatives and the centre-left Social Democrats are starting talks on forming a new government, attempting to break an impasse more than three months after the country's election.

Merkel's party polled first in Germany's election previous year but failed to secure a majority.

Michael Grosse-Broemer, head of the conservative group in parliament, told reporters he expected hard talks on the most sensitive issues on Thursday, but remained upbeat that a deal could be reached.

In a session that started on Thursday morning and lasted more than 24 hours, Mrs Merkel's Christian Democratic Union, the Bavarian-only Christian Social Union and the Social Democrats hammered out a 28-page document outlining compromise positions on a range of issues including taxes, migration and health care.

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

Following a dismal result in Germany's September 24 election, the Social Democrats initially vowed not to enter another government with Merkel's conservatives, but they reconsidered their position after the long-time chancellor's attempts to form a coalition with two smaller parties collapsed. "But I'm starting this day with a lot of energy because we know that people expect us to find solutions".

"The coalition negotiations probably won't be easier than the exploratory talks". A conservative negotiator told Bild, "Everything is on the table".

Germany's political uncertainty is at odds with its flourishing economy, whose growth hit a six-year high in 2017, helping deliver a record 38.4 billion euro (S$61.3 billion) public sector surplus.

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"What is your plan for Germany?" "If we join a government it will be on the condition that it makes Europe strong".

"We will make clear in the last day of talks that a new government has to bring about a new departure for the European Union", he said.

Germany has been in political paralysis since a Sept 24 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.

Some progress has been made, including draft plans in which negotiators agreed to reduce the use of the weed killer glyphosate, and to drop a target of reducing carbon dioxide emissions by 40% by 2020 from 1990 levels.

Initially the SPD ruled out governing with Mrs Merkel in charge again. But both parties lost votes in the September 24 election, which saw the far-right Alternative for Germany (AfD) enter the Bundestag (national parliament) for the first time.

Though members of both parties worry that another grand coalition could further erode their support and strengthen fringe parties, they fear new elections even more.

SPD delegates will have their say on the preliminary coalition deal at an extraordinary party conference on January 21st.

He told broadcaster ARD late on Thursday he had folders of messages of support from SPD members who wanted the SPD go back to its roots and focus more on helping the weakest in society.

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