Angela Merkel’s Christian Democratic Union and the centre-left Social Democrats have agreed on a paper outlining the basis for moving ahead with formal coalition talks.
The German Chancellor and Social Democrats leader Martin Schulz held overnight talks in Berlin, during which they hammered out a 28-page paper outlining their compromise positions on issues including taxes, migration and healthcare.
“Many, many hours of work, serious wrangling and shaping are contained in these 28 pages,” tweeted Christian Democratic Union politician Julia Kloeckner, part of Mrs Merkel’s negotiating team.
Social Democrats spokesman Serkan Agci said there had been a “breakthrough” agreed by party leaders but said final revisions were still being made on the document by negotiating teams, which would also need approval.
The final negotiating session between the two sides began on Thursday morning and continued through the night.
Mr Schulz described the talks as “long, tough, exciting and turbulent”, adding: “I think we achieved an excellent result.”
Meanwhile, Mrs Merkel said: “The world is not waiting for us, we need a fresh start in Europe.
“A fresh start for Europe is also a fresh start for Germany.”
The talks follow a shock general election last September that failed to return a majority, leaving the Christian Democratic Union and Social Democrats with reduced vote shares and Germany without a government.
The Social Democrats initially vowed not to form a government with Mrs Merkel’s conservatives, but reconsidered their position after the long-time Chancellor’s attempts to form a coalition with two smaller parties collapsed.
German President Frank-Walter Steinmeier appealed to negotiators on Thursday to consider their responsibility towards Europe, not just their own parties and political futures.
However, there is still a long way to go before a deal is done.
Mr Schulz will have to convince delegates at a party conference of coalition talks and is expected to face resistance.
Both sides then need to come to an actual coalition agreement, which would have to be approved in a ballot of the Social Democrats’ entire membership.