Political leaders in Germany have reached a breakthrough in talks to form a new coalition government, following months of uncertainty after elections in September failed to produce an overall majority for any party.
Germany's Chancellor Angela Merkel entered into talks with a rival party earlier this week in a last-ditch effort to form a government. This after a political deadlock in the euro zone's largest economy that had shed some doubt on the future of Merkel's leadership.
After 24 hours of grueling discussions — that reportedly ran all through the night — a new blueprint for more formal coalition talks was presented to party members on Friday morning. At best, a government will still not be sworn in by late March or early April, according to some experts. Nonetheless, the euro surged higher Friday morning on the news and German bond yields hit fresh five-month highs.
Merkel, the head of a conservative alliance made up of the Christian Democratic Union (CDU) and its Bavarian sister-party the Christian Social Union (CSU), met with Martin Schulz, the head of the Social Democratic Party (SPD), for the preliminary talks. The SPD had previously refused to enter into another coalition government given that its voters punished it in the last election for its previous alliance. But after coalition talks between Merkel and two other parties failed to find an agreement, the SPD changed its stance.