After a month of negotiations and two days of post-deadline delays, what UBS’ economist Paul Donovan has dubbed the “world’s most tedious political crisis” is finally over and on Wednesday morning, Germany reached a grand coalition, as news broke that Angela Merkel’s conservatives block reached a deal with the the Social Democratic SPD on forming a new government, ending a deadlock that gripped Germany since inconclusive elections last September.
“Tired but happy,” SPD leaders said in a message to party members. “We have an agreement! Finally.”
According to the FT, talks between the SPD and CDU/CSU were dogged for weeks by disagreements over health and labour policy. The SPD wanted a crackdown on short-term contracts, and also wide-ranging reform of Germany’s health system — though it backed away from an earlier demand to effectively phase out private health insurance.