Agreement reached on basis for German coalition talks

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German Social Democrat (SPD) leader Martin Schulz said his party's leaders agreed unanimously on Friday to recommend to party delegates that they give them a mandate to pursue coalition talks with Chancellor Angela Merkel's conservatives.

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.

After more than 24 hours of talks and months of political paralysis, red-eyed party chiefs and their negotiating teams reached an in-principle agreement that could lead to a new government for the biggest European Union economy in coming months.

The VdK, representing 1.8 million members, also welcomed the prospective coalition's intention to fix acute shortages of nursing personnel for senior residents but said access to basic pensions for the poor was far from everyday reality.

The draft pact will form the basis of formal talks aimed at creating a new coalition government, which the CDU/CSU and SPD hope to form by April.

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The deal will lead to the formation of another "grand coalition" between Germany's two main political parties.

"The difficulties to reach the current compromise shows that any new grand coalition will not be the result of love at first sight, but rather a coalition of convenience", said Carsten Brzeski, chief economist at ING-Bank AG.

He reluctantly reconsidered after Merkel's coalition talks with two smaller parties collapsed in November.

Commenting on the current political situation in the country, German President Frank-Walter Steinmeier said that "we are now facing a situation that has never happened before in the history of the Federal Republic of Germany, that is for nearly 70 years".

The conservatives also performed poorly in the election, and the three coalition parties' support dropped by a total of almost 14 percentage points.

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The parties pledged to fight tax dumping and evasion in Europe, pushing for "fair taxation of big companies" including internet giants Google, Apple, Facebook and Amazon, and called for unspecified minimum rates for corporate tax.

In return, reports indicated that the Bavarian sister party of Merkel's CDU had succeeded in its goal to limit the number of family members who can be reunited with refugees that have been granted asylum in Germany.

"In the long time since the elections, we have seen that the world is not waiting for us", Merkel told reporters on Friday.

But party leaders were in a buoyant mood on Friday morning. Jean-Claude Juncker, the head of the EU's executive Commission, said the European part of the deal was "a significant, positive, constructive future-looking contribution to the European policy". He also supports the creation of a finance minister and stand-alone parliament for the eurozone - ideas that are viewed with scepticism in Germany and did not appear in the coalition document.

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