Key Preliminary Outcomes of the German Coalition Talks

German Social Democratic (SPD) leaders appealed to party members Friday to swallow their doubts and endorse an overnight deal to renew a "grand coalition" with Chancellor Angela Merkel's conservatives for another four years.

The main hurdle to a rerun of the so-called grand coalition of Germany's two main parties now lies with the Social Democrats, who at first refused to extend their alliance with Merkel after suffering their worst electoral defeat since World War II.

"Even though these pre-coalition talks are meant more as a getting to know your partner, they really have become coalition talks", said Thomas Meyer, a political scientist at the University of Vienna, noting that final negotiations are increasingly based on the points hammered out during preliminary talks. Then, if those talks are successful, he must steer a coalition deal through a ballot of the full party membership. "I think we produced excellent results".

Christian Democratic lawmakers greeted their leader with a round of applause when she outlined the arrangement, which pledged closer cooperation with France to strengthen the euro zone and a crackdown on arms sales to countries in conflict zones.

If the new coalition doesn't come together, the only remaining options would be an unprecedented minority government led by Merkel's conservatives or a new election.

"This is good news for Europe", Gentiloni said in a series of tweets.

Germany's acceptance of refugees has been a key part of the deal.

The chancellor is under pressure to succeed after her attempt to patch together a coalition with the Green party and the pro-market Free Democrats failed in November.

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"We are also ready for higher contributions from Germany to the EU budget", says the paper, adding that Germany is to be actively involved in the debate on the future of the European Union (EU) and strengthening European integration.

The conservatives also performed poorly in the election, and the three coalition parties' support dropped by a total of almost 14 percentage points. That vote also saw the far-right Alternative for Germany (AfD) enter the Bundestag for the first time.

They pledged to fight tax dumping and evasion in Europe, pushing for "fair taxation of big companies" including the internet giants Google, Apple, Facebook and Amazon, and called for unspecified minimum rates for corporate tax.

They plan to limit asylum-seeker arrivals to about 200,000 annually.

Cap at 1,000 a month the number of people who will be allowed to join their family now living as refugees in Germany.

European Commission president Jean-Claude Juncker said the deal was "significant" and "positive" for the EU's future, while French President Emmanuel Macron said he was "satisfied and happy" that the deadlock was broken.

Prime Minister Boyko Borissov of Bulgaria, which now holds the bloc's rotating presidency, said the European Union was waiting "impatiently" for Merkel to reemerge, heading a new coalition: "for the benefit of all".