German Chancellor Angela Merkel’s conservatives and the Social Democrats (SPD) failed to conclude coalition negotiations in time to meet a self-imposed deadline but have made progress and will reconvene, SPD members said.

More than four months after a national election, Europe’s largest economy and pre-eminent power-broker is in political paralysis, causing concern among investors and partner countries that policymaking on issues such as Britain’s looming departure from the European Union and euro zone reform may be held up.

The conservatives and SPD had hoped to agree on Sunday to renew the “grand coalition” that has governed Germany since 2013, but disputes over healthcare and labor policy remain.

“We had a very constructive day today and we reached a lot of agreements,” said SPD General Secretary Lars Klingbeil, pointing to deals on rents and real estate, digitalization and culture. He said negotiators agreed to talk again “in detail and in a focused way” about several contentious issues.

Berlin Mayor Michael Mueller, another SPD negotiator, told German broadcaster ZDF the overall package still needed to be assessed, but he was heartened by an agreement to protect renters against excessive increases in rental costs.

“We have a basis that is getting better day by day,” he said.

The SPD, stung by its worst post-war result in September elections, is struggling to extract concessions that will convince its 443,000 members to approve another tie-up with conservatives.

CDU deputy Thomas Strobl told ZDF he expected the parties to reach an agreement. “We need a bit more time,” he said.

Asked if the negotiations could still fail, senior conservative Reiner Haseloff told broadcaster ARD: “I don’t think so. I hope not. I can’t think of any topic that is insurmountable.”

Merkel, in office for 12 years, had said earlier on Sunday that her conservatives faced tough negotiations with the SPD, adding: “We did good groundwork yesterday but there are still important issues that need to be resolved.”

Source: Reuters

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