Germany's Angela Merkel finally reaches coalition deal with SPD

Angela Merkel’s conservatives (CDU) have finally reached a coalition deal with the centre-left Social Democrats (SPD) after months of political deadlock in Germany.

Negotiators have agreed to the terms of the deal and the division of key ministries, ending one of the last hurdles towards forming a government.

The breakthrough could end the prolonged period of political uncertainty in Germany, since last September’s inconclusive September elections.

The coalition would make the rightwing populist party Alternative für Deutschland the leaders of the opposition.

However, the deal still have to be approved by SPD’s 460,000 members, with any in the party fearing that re-entering a coalition with CDU/CSU could damage it in the long term.

The news outlet Spiegel reported that the SPD had managed to secure the finance, foreign and labour ministries as part of the deal, marking a significant feat for the leader, Martin Schulz.

Schulz is now reportedly planning to hand his party leadership to former labour minister Andrea Nahles and move to the foreign ministry.

In a joint news conference on Wednesday, Chancellor Merkel said the agreement gave the basis for a "good and stable government".

Martin Schulz's SPD has to approve the deal(Photo: BBC)

SPD leader Martin Schulz thanked the conservatives for making what he said were tough compromises.

In a tweet, he said the deal "achieved a lot for people" and he would be recommending that his party members accept it.

A boosted interior ministry with an additional focus on life in regional areas has reportedly been handed to Horst Seehofer of the CSU, the Christian Democrats’ sister party.

As well as staying in charge of Merkel’s chancellery, the Christian Democrats are said to have claimed the ministries for economy and defence.

The CDU and the SPD have been in coalition talks since the first week of January after the collapse of Merkel’s attempt to form a coalition with the pro-business Free Democrats and the Green party.

Talks will run into Wednesday morning, as the chancellor had to postpone an official lunchtime meeting with Italy’s prime minister, Paolo Gentiloni, until the early evening.

Once the two parties have officially presented their coalition agreement, the Social Democrats will allow their 460,000 members a vote on whether the party should formally enter a governing coalition with Merkel’s party.

The SPD’s leadership faces opposition from a number of groups, including its own youth wing, the Young Socialists, who believe it should reinvent itself in opposition rather than seek another term in government.