Conservatives faced tough negotiations with the Social Democrats says Angela Merkel

Vastavam web: German Chancellor Angela Merkel said on Sunday that her conservatives faced tough negotiations with the Social Democrats (SPD) as they strive to form a ruling coalition, and it was unclear when they would be able to wrap up the talks.More than four months after a national election, Europe’s largest economy and pre-eminent power broker is in political paralysis, causing concern among investors and partner countries that policymaking on issues such as Britain’s looming departure from the European Union and euro zone reform may be held up.

The conservatives and SPD had set themselves a Sunday deadline to agree on renewing the “grand coalition” that has governed since 2013 but some politicians said the discussions could run into Monday or Tuesday. Even then, SPD grassroots members will still need to vote on any deal.Asked on ARD television if the negotiations could still fail, senior conservative Reiner Haseloff said: “I don’t think so. I hope not. I can’t think of any topic that is insurmountable.”

The parties agreed on Sunday to invest more than two billion euros in social housing by 2021, to spend up to 12 billion euros on expanding broadband and to channel 33 billion euros to municipalities for various projects including childcare.As he arrived for talks, SPD leader Martin Schulz said the sides had edged closer on many issues but remained at odds over an SPD demand to abolish fixed-term employment contracts and its call to replace Germany’s dual public-private healthcare system with one insurance system for all.“I think agreements are possible but they still haven’t been reached,” Schulz said. “Ultimately it’s necessary to take the time you need to create a stable foundation for a stable government.”

The conservatives have rejected SPD calls for sweeping reform of health insurance and talks are now expected to focus on improving public healthcare, such as by changing billing rules for doctors, who earn more by treating private patients.SPD negotiator Manuela Schwesig, aware of the need to push through distinctive SPD policies to sell the deal to the party at large, said: “We’ve promised our members that we’ll negotiate until the other side squeals, and we’ll do that.”

The parties plan to negotiate until midnight (2300 GMT) at the latest on Sunday and if they do not manage to conclude talks by then, they will resume at the SPD headquarters on Monday, sources said.