(Reuters) - Momentum in Germany is building for a new ‘grand coalition’ between Chancellor Angela Merkel’s conservative bloc and the Social Democrats (SPD) to end the political instability created by the collapse of her coalition talks with other parties.
The conservatives and SPD have ruled together for the last four years and most ministers are keeping their posts in an interim government until a new coalition or minority government is formed.
German President Frank-Walter Steinmeier hosts a first meeting of Merkel, the head of Bavaria’s CSU conservatives, Horst Seehofer, and SPD leader Martin Schulz on Thursday.
Here are some of the overlaps and differences in policy areas likely to be discussed in any coalition talks.
Merkel has stressed she wants to maintain Germany’s solid finances. Germany has run a budget surplus since 2014 under the stewardship of her hardline conservative finance minister, Wolfgang Schaeuble.
She has also said she wants some tax cuts, mainly for low and medium earners.
The SPD is far more focused on boosting spending and has in the last few days said it wants to increase investment in education and homes as well as on infrastructure.
The SPD wants to increase inheritance tax, some in the party want to insist on raising the minimum wage and it fought the election on a pledge of keeping pensions stable.
The conservatives and SPD both want to increase spending to expand broadband.
An area of possible conflict.
Since the election, Merkel has bowed to pressure from her Bavarian allies to put a cap on the number of people Germany will accept on humanitarian grounds. Merkel repeated on Saturday that she wanted to limit the number to about 200,000 a year.
The SPD opposes this, arguing it breaches the constitution’s guarantee of asylum to people who are persecuted for political reasons. Some leading party members have said they will not agree to a cap.
The SPD is more positive than Merkel’s cautious stance towards French President Emmanuel Macron’s proposals for a euro zone budget and a euro zone finance minister.
The SPD also backs the idea of turning the European Stability Mechanism (ESM) bailout fund into a European Monetary Fund along the lines of the International Monetary Fund (IMF).
There is little difference on approach to Brexit talks.
Broad agreement on most areas of foreign policy, including with the United States and Turkey. The SPD puts greater emphasis on mending ties with Russia which have been hurt by the conflict in Ukraine, but this is more a matter of nuance than a deep policy rift.
Also agreement on armed forces missions abroad although the SPD is more sceptical on NATO demands to move towards increasing defence spending to 2 percent of gross domestic product by 2014.
The SPD fought its election on the platform of social justice and wants to improve the lot of the less affluent.
A long-standing commitment which several senior SPD members have repeated recently is the idea of making health insurance fairer for everyone by introducing a ‘citizen’s insurance’.
The SPD also wants to ensure men and women have equal pay and working conditions.
Reporting by Madeline Chambers; Editing by Keith Weir