Merkel's conservatives and SPD agree on coalition agreement

German Chancellor Angela Merkel’s conservatives and the Social Democrats (SPD) have agreed on a formal coalition deal, a conservative politician and a source involved in the negotiations said.

However, any deal still needs to be approved by the SPD's 464,000 members, who could yet vote against another grand coalition with Merkel’s Christian Democratic Union (CDU) party, Express reported.

According to German media, Merkel’s conservatives have been forced to cede major government positions to their coalition partners, with the SPD due to take the foreign, finance and labour ministries in a new government.

The CDU will get the economy and defence portfolios and, in a move designed to stop more voters turning to the rightwing Alternative for Germany (AfD) party, Merkel's Bavarian ally Horst Seehofer - who takes a tough line on immigration - would become interior minister.