Social Democrats sign up to new Merkel-led German government

Germany's Social Democrats (SPD) decisively backed another coalition with Chancellor Angela Merkel's conservatives, clearing the way for a new government in Europe's largest economy after months of political uncertainty. Two-thirds of the membership voted "yes" to the deal in a ballot - a wider margin than many had expected. 

That means Merkel could be sworn in for a fourth term as early as the middle of the month, in a repeat of the grand coalition that has governed since 2013. German President Frank-Walter Steinmeier said that he would propose Merkel as Chancellor to the Lower House of Parliament today. The president's role in Germany is largely ceremonial, with the real power residing with



Merkel. 

The euro rose a quarter of a percent to hit a 12-day high of 1.2358 dollars in early Asian trading before exit polls showing Italy's election was likely to result in a hung parliament knocked it lower again. Some analysts said the common currency would be buoyed by Merkel now being able to partner with France on President Emmanuel Macron's ambitious eurozone reform plans. 

A statement from Macron's office added that France and Germany will work together on new initiatives in the coming weeks to bring the European project forward. Acting SPD leader Olaf Scholz announced the result to activists lining the balconies around the atrium of the party's Berlin headquarters yesterday.