Merkel and Social Democrats reach coalition deal

After protracted talks, Angela Merkel's conservatives (CDU/CSU) have made a deal with the centre-left Social Democrats (SPD) for a new coalition contract in Germany.

The SPD confirmed this in a message to its 460,000 members, who will have the final say in a postal vote due in the coming weeks.

In a joint news conference on Wednesday, Merkel said the agreement gave the basis for a “good and stable government”, while SPD leader Martin Schulz thanked the conservatives for making what he said were tough compromises.

MERKEL LOSES INTERIOR AND FINANCE MINISTRIES

According to early media reports, the SPD would be handed the Finance Ministry, a key role for the future direction of the eurozone, along with the Labor and Foreign Affairs Ministries.

German media say Schulz is hoping to get the job of foreign minister, and hand his party leadership to former labour minister Andrea Nahle.

Meanwhile, Bavaria's CSU, which advocates a tougher line on immigration than Chancellor Merkel, takes over the Interior Ministry.

Merkel's CDU gains the Economy Ministry and smaller posts, giving up the influential Interior and Finance ministries.

IMMIGRATION AND THE EU

The three parties have agreed that the European Union needs “more investment”, specifically the investment related to the budget for the eurozone. That deal was celebrated by the SPD as “an end to the austerity mandate” across the European Union, but it remains to be seen how the details work out.

Conservatives and Social Democrats dealt with the hot topic of immigration fairly early: all of them agreed last week that the number of immigrants brought to Germany via family reunification would be limited tot 1,000 a month. They also confirmed that the current suspension on reunifications would end on July 31.