German chancellor Angela Merkel has finally reached a deal to form a new coalition government.
The powerful finance ministry has been handed to the country’s main centre-left party, the Social Democrats, in an agreement aimed at ending months of political gridlock.
Social Democrat leaders now have one last major hurdle to overcome — winning their sceptical members’ approval over the deal.
Mrs Merkel’s conservative Christian Democratic Union, its Bavaria-only sister, the Christian Social Union, and the Social Democrats shook hands on a 177-page deal that leads off with the promise of “a new awakening for Europe” after a gruelling 24 hours of negotiations.
Mrs Merkel said: “I know that millions of citizens have been watching us closely on this long road over recent weeks.
“They had two justified demands of us: First, finally form a government — a stable government — and second, think of people’s real needs and interests.”
The coalition deal could be “the foundation of a good and stable government, which our country needs and many in the world expect of us”, she added.
Germany has already broken its post-Second World War record for the longest time taken between its latest election on September 24 and the swearing-in of a new government. That is still at least several weeks away.
Mrs Merkel currently leads a caretaker government, which is not in a position to launch major initiatives or play any significant role in the debate on the European Union’s future, led so far by French president Emmanuel Macron.
A key role in the EU is a particular goal of Social Democrat leader Martin Schulz, a former European Parliament president.
On Wednesday he declared that, with the coalition deal, Germany “will return to an active and leading role in the European Union”. The agreement states, among other things, that Germany is prepared to pay more into the EU budget.
The coalition accord will be put to a ballot of the Social Democrats’ 460,000 members, a process that will take a few weeks. Germany’s highest court said on Wednesday it had dismissed a series of complaints against the ballot.
Many Social Democrats are sceptical after the party’s disastrous election result, which followed four years of serving as the junior partner to Mrs Merkel’s conservatives in a so-called “grand coalition”. The party’s youth wing vehemently opposes a repeat of that alliance.
If Social Democrat members say no, the new coalition government cannot be formed. That would leave only an unprecedented minority government under Mrs Merkel or a new election as the remaining options.