Merkel and Social Democrats almost agreed on formation of the government

Yesterday, the Social Democratic Party of Germany (SPD) and the conservative bloc of the Christian Democratic and Christian-Social Union (CDU / CSU) coordinated the main provisions of the future coalition agreement. As Deutsche Welle writes in the article Germany's grand coalition talks enter second period of extra-time,  labor market and healthcare policy points still divide the two parties.

On Tuesday morning, German officials reacted positively to the fact that the conservative bloc of Chancellor Angela Merkel and SPD will strike a deal to create a new coalition government by the evening.  As she headed into the final round of talks on Tuesday, Merkel called on all sides to make the necessary concessions and strike a deal that would end months of political limbo. "Each of us will still have to make painful compromises," the chancellor said. "I am prepared to do that if we can be sure in the end that the advantages outweigh the disadvantages," she added. "We live in turbulent times. We need a government that offers dependability in the interests of the people."

SPD leader Martin Schulz also said today's decisive stalks were "about nothing less than building stable, lasting government in one of the largest industrialized countries in the world."

However, the sides still remain divided on several issues, most notably labor and healthcare policy. The CDU and its Bavarian sister party, the Christian Social Union (CSU), continue to reject any sweeping changes to Germany's health insurance system. The SPD, meanwhile, wants to see Germany's two-tier health system reformed with a new system that closes the care gap between citizens with private and statutory insurance.

The CDU's Klöckner said her party wanted to see welcome changes to Germany's healthcare model but warned that a "one-size-fits-all" system would be too expensive.

SPD chief Martin Schulz also wants to see the phasing-out of fixed-term job contracts. Some 2.8 million contracts in Germany are said to be on a fixed-term basis without an explicit reason, with workers under the age of 30 particularly affected.

Loose ends also still need tying up on foreign, defense, developmental and financial policy.

Officials from the CDU/CSU and the SPD had hoped to conclude the negotiations by Sunday evening, but set aside an additional two-day buffer to reach a deal. Despite their differences, The deputy leader of Merkel's Christian Democrats (CDU), Julia Klöckner, told reporters on Monday evening she assumed "we will be ready tomorrow night on Tuesday into Wednesday."

Should the talks reach a successful conclusion, the SPD's 450,000 registered members will then get the opportunity to vote on the agreed draft coalition deal. The public is expected to have to wait around three weeks for the vote to yield a result.

Should it pass, a new federal government would be expected to be formed by around Easter.

Key points agreed so far:

-An annual limit of between 180,000 to 220,000 migrants allowed to settle in Germany

-More money for clinics and doctors in rural areas

-More financial aid for families with children

-The creation of 15,000 new police jobs split between the federal government and the 16 states

-A €4 billion ($4.97 billion) investment into social and private housing construction, with the goal of building 1.5 million new homes by 2021

-A €10 billion investment into high-speed broadband expansion, with the right to fast internet enshrined in law by 2025.