SPD backs coalition deal and Merkel secures fourth government

Germany's Social Democratic Party (SPD) has backed a great coalition again, putting an end to six months of political uncertainty, while handing Chancellor Angela Merkel her fourth consecutive term in power.

At the weekend, the SPD announced that 66.02% of its loyal and faithful had voted in favour of the deal with the Christian Democratic Union (CDU).

The first time that the SPD joined Merkel’s CDU in government was in 2005 and the second one in 2013, pushing through several key pieces of legislation in exchange, including on higher minimum wages, setting the age of retirement at 63 years and legalising homosexual marriage, among other measures.

In the September elections last year, Merkel’s party fell short of an absolute majority, but so too the SPD, led by Martin Schulz, failed to capitalise on voter discontent, setting the scene for negotiations on forming a third grand coalition.

Angela Merkel congratulated her new coalition partners via Twitter, saying that she "looks forward to working together again for the benefit of our country”.

Next week, the SPD will announce the six ministers it has chosen to represent it in the coalition, although it had already indicated that it would opt for three men and three women, with some of them being new faces while others had served as ministers during the previous cabinets.

Experts at Deutsche Bank said, "the appearance of a post-Schaeuble pro-European policy stance by Germany is a buffer against the potential risks from Italy. This morning, the euro initially strengthened on Germany’s developments but pared back gains to be marginally lower following news from Italy."