France's Macron welcomes Merkel's deal with Social Democrats, says good for Europe

France's Macron welcomes Merkel's deal with Social Democrats, says good for Europe

France's Macron welcomes Merkel's deal with Social Democrats, says good for Europe

Gentiloni "has had contact" with Germany's Chancellor Angela Merkel and with center-left SDP party leader Martin Schulz after their breakthrough on talks to form a new coalition government, sources from Gentiloni's office said on Friday.

Dr Merkel's conservatives had said they want to have a government in place by the end of March.

Although the coalition agreement has yet to be formally announced, preliminary reports suggest that negotiators have struck a deal on the outlines of a program, concluding a process which began after last September's inconclusive general election. The SPD will now ask members to vote on whether they want to take that step.

"I think we achieved an excellent result", Schulz said.

Oskar Niedermayer of Berlin's Free University said that "in the interest of her party's electoral strength, she should not stay in office for the entire legislative term".

The deal was welcomed by Germany's European allies, but her prospective partner now faces a tough task to sell it to skeptical supporters.

If things go well, a new government could be formed by April 1, said Horst Seehofer, the leader of the Christian Social Union - the Bavaria-only sister party to Merkel's Christian Democratic Union.

Had the talks failed, Merkel's only options would have been to form a minority government or hold new elections. "A fresh start for Europe is also a fresh start for Germany".

The euro jumped to a three-year high against the U.S. dollar after the deal was announced, reflecting the relief of analysts and the perceived importance of German leadership to the European economy.

The three coalition parties' support dropped by a cumulative total of almost 14 percentage points in the election.

In their joint blueprint, the parties agreed on key policy outlines - to join European Union partner France in a push to "strengthen and reform" the eurozone, to limit the influx of asylum seekers to Germany to around 200,000 a year, and to refrain from tax hikes given the healthy state of public coffers. The number allowed to enter the country has been set at 220,000 per year.

Christian Democrat and Social Democrat leaders also agreed to lower the tax surcharge introduced to fund the reunification of east and west Germany by €10bn (£9bn) by 2021.

Though most European economies - and the euro - have been in good shape in recent months, the lack of German leadership was threatening to affect Brexit and stall the push for European Union reform, led most vocally by French president Emmanuel Macron.

"We have, in what feels like a long time since the election, seen that the world will not wait for us", Merkel said.

Prominent Social Democrat opponents of a new "grand coalition" of Germany's biggest parties weren't placated by Friday's deal and vowed to keep fighting it.

The two parties also stress Europe's role in peace and global responsibility in the document, clearly rejecting protectionism, isolationism and nationalism and calling for more worldwide cooperation.

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