Germany crisis: Merkel faces pressure for quick coalition talks

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German Chancellor Angela Merkel has rejected new elections and wanted to form a new government quickly, as a effect of the failed government coalition talks with the Free Democratic Party (FDP) and the Greens.

Schulz indicated on Friday that the SPD might consider coalition talks with the CDU/CSU alliance, although his party had initially ruled out this possibility.

It is not yet clear whether the SPD will enter into a new coalition with Mrs Merkel, or whether it will only offer to prop up a minority government from the outside, the report said.

Merkel is against going down that route because of its inherent instability, but pundits have said the conservatives and Greens could form a minority government with informal SPD support.

European leaders have stressed the importance of Germany getting its political house in order ahead of the European Council summit in December.

Merkel believes Berlin can do business the way things are as she is leading an acting government with most of her former ministers, including SPD ones, still in post until a new coalition is formed.

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Chancellor Angela Merkel faced pressure from inside her conservative bloc Sunday to aim for a quick coalition deal with center-left rivals without conceding too much ground on core issues such as immigration.

Even before any talks get under way, the two blocs have started to outline their policy priorities.

"We do not have a government crisis, but Germany is in a complicated situation", Mr Schulz said.

Merkel's conservatives have pushed to curb migrant flows and are keen to ensure that Germany sticks to a balanced budget.

Several prominent economists said they expect the SPD to wield significant influence in a new grand coalition.

That would mean higher state spending and smaller tax cuts than would have been agreed with other potential partners. "There will not be a grand coalition at any price", he said.