Angela Merkel's party, others strike coalition deal

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CDU politician Julia Kloeckner, part of Mrs Merkel's negotiating team, tweeted on Friday morning: "Many, many hours of work, serious wrangling and shaping are contained in these 28 pages". After putting out a well-publicized welcome mat - the so-called Willkommenskultur, or welcome culture - refugees and German citizens alike were stunned when the government did not set up obvious programs to shelter and register before allowing them in.

But to make a new government a reality, he must first persuade a party congress January 21 to agree to hold formal coalition negotiations.

The blueprint for the next round of talks features a range of points, according to Reuters who cited sources close to the negotiations.

Here are some of the hurdles that the two sides will have to overcome before advancing to formal coalition negotiations towards a government by spring.

In the latest talks, both the conservative Christian Social Union and the progressive Social Democrats fought hard to ensure government policy would reflect their campaign promises.

"I wasn't certain it would work", Merkel told reporters. "I knew it would be hard".

And Thursday may be the last chance for Chancellor Angela Merkel to strike a deal or face the prospect of a new election.

On Friday, he defended his and other SPD leaders' 180-degree turn.

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

"No question that every time she needs to push a piece of legislation through she'd have to "ad-hoc" would be on her shoulder to make a sale", said Jackson Janes, president of the American Institute for Contemporary German Studies at Johns Hopkins University.

After the parties cleared obstacles on immigration and taxes, Merkel said she was "optimistic" they could seal a deal on a "stable" right-left "grand coalition" government.

Angela Merkel's conservatives reach preliminary deal with Social Democrats.

President Frank-Walter Steinmeier reminded all sides that they "have a responsibility towards Europe and for reliability, partnership and engagement in worldwide politics". "And that's something that Germany really has to prepare for".

However that will likely depend on whether she can build on the policy document agreed on Friday over the coming months and forges what would be her third "grand coalition" with the SPD.

With an eye on a regional election in Bavaria later this year, where current polls show that the CSU could lose its absolute majority, the party wants financial handouts to asylum seekers reduced.

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.

Days after the German election in September, Macron spelled out sweeping proposals in a speech in Paris.

The markets rallied at the news of the prospective deal and the euro jumped to a three-hear high.

"We expect Germany to join the movement, by adopting more offensive wage policies and investing more".

French President Emmanuel Macron said he was "happy and satisfied" that a new Merkel-led coalition was in sight.