'Big obstacles' still in the way in German coalition talks

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'Big obstacles' still in the way in German coalition talks

And, for her part, Merkel made clear the Social Democrats were not her first pick for a coalition partner - but after talks with other party leaders collapsed in November, she had few other choices if she wished to end the stalemate that has left Germany without a new formal government for almost four months.

Germany now has a caretaker government, limiting Merkel's ability to launch major initiatives at a time when French President Emmanuel Macron has pressed for ambitious reforms in the European Union.

However, an SPD party conference set down for January 21 still has to approve holding the talks for a rerun of the Merkel-led coalition that has ruled the nation for eight of the chancellor's 12 years in power.

The CDU/CSU and the SDP have agreed to limit the number of asylum seekers coming into Germany to between 180,000 and 220,000 per year.

The euro jumped to its highest level against the dollar since early 2015 on Friday after German lawmakers agreed on a coalition blueprint, more than three months after the country's general election.

Germany has been in political limbo since a September 24 election in which Merkel failed to win a clear majority - in part due to the rise of the far-right Alternative for Germany (AfD) which took millions of votes from all major parties.

Conservatives, though, were pleased Friday's coalition blueprint omitted a call from the SPD's Schulz for a "United States of Europe" by 2025.

However the plans bring Germany much closer to his views on the Eurozone - meaning Angela Merkel is highly likely to throw her weight behind his vision, which also includes an European Union army and shared defence budget in a bold vision for Europe.

"It's a good news for European integration, as France and other EU major countries are waiting for Germany to have opinions on it, and on some points like stronger European common budget, is really a big astonishment for me", Prof.

Martin Schulz, who previously shunned the notion of a coalition with Chancellor Angela Merkel, has come around to forming a government with her bloc. "There is still a risk, even in a scenario where Merkel is able to form a government, that she will not be able to fulfil her complete term".

This comes as a relief to Merkel, who could have faced fresh elections had the coalition talks collapsed.

European Commisison president Jean-Claude Juncker welcomed "a significant, positive, constructive, forward-looking contribution to the European policy debate".

Early Thursday, Merkel had expressed optimism about a deal, telling reporters in Berlin that "large obstacles" remained but she meant to push for new compromises.

"All the topics that we raise also depend on the cooperation with Angela Merkel", Borissov said.

"The negotiations are not just about a coalition, but also their careers".

This after months of political uncertainty and deadlock in the euro zone's largest economy. The Social Democrats must also put the agreement to their members, an obstacle that all three party leaders acknowledged Friday morning. They feared of the party being further minimalized under the Union.

The CSU's chief Horst Seehofer said he hoped a new government would be in place before Easter which falls on April 1.

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