According to sources familiar with the talks, Germany’s conservatives and the centre-left Social Democrats are set to reach a deal on forming a coalition government by midday on Wednesday.
Conservative election winner Friedrich Merz and his team will convene again with the Social Democrats, or SPD, led by Lars Klingbeil, at 9:30 a.m. (0730 GMT) with the aim of overcoming their last remaining differences within a few hours, the sources said.
Merz and Klingbeil have internally scheduled a press conference in the afternoon, contingent on reaching a final pact around midday, the sources added.
U.S. Tariffs A Factor
The prospective partners have been under pressure to speed up their talks amid the financial market turmoil and escalating trade war sparked by U.S. President Donald Trump’s sweeping import tariffs, which could stoke inflation and have raised fears of a global recession.
Finance minister Joerg Kukies of the SPD on Wednesday told Deutschlandfunk radio that the threat of a recession had added urgency to the negotiations.
“It increases the pressure to act, because Germany needs a government that is capable of taking action,” he said.
He said the two sides had already agreed they would support a free trade zone between the European Union and the United States, while being open to further cross-border trade deals.
Merz’s Tough U.S. Stance
Merz, who called Trump’s U.S. an unreliable ally after winning the election in February, has also vowed to build up defence spending as Europe faces a hostile Russia, and to support businesses struggling with high costs and weak demand.
German economic institutes have cut back their forecast for this year’s growth to 0.1% from the 0.8% they had expected in September, sources told Reuters on Tuesday. The economy, Europe’s largest, is particularly reliant on exports.
The last remaining issues that the SPD and Merz’s conservative CDU/CSU bloc have yet to agree on include the distribution of ministries, the sources said.
(With inputs from Reuters)
