The embattled German leader of the CDU met with SPD leader Martin Shulz today to set out the structure of exploratory talks in an initial meeting, alongside CSU leader Horst Seehofer.
The talks resulting in an initial programme of government will begin on Sunday 7, and should be completed by January 11.
But Ms Merkel has just 10 days to come up with a draft coalition deal, or else she will have to go back to the polls.
All sides talked of growing confidence today, which will be seen as good news for Ms Merkel, whose reputation as Europe’s consensus-builder is one line in this second bid to form a coalition after weeks of sniping between its would-be partners.
A joint statement issued after three hours of talks between the three parties said: “Confidence has grown and we are optimistic heading into the talks.”
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Ms Merkel is seeking a fourth term in office but saw her authority weakened in a national election in September, when support for her conservatives was eroded by the far-right.
A renewed grand coalition of Germany’s biggest parties would save the Chancellor from having to lead with a minority government.
Whether the negotiations are a success could also determine whether she will be able to continue as CDU leader.
The groups – the CDU and CSU “Union” on one side and SDP on the other – are at odds on issues from healthcare and pensions to immigration and Europe.
Having failed before Christmas to form a coalition with the Greens and pro-business Free Democrats (FDP),Merkel is now leading an interim government with the SPD that is keeping things ticking over in Europe’s biggest economy.
Merkel’s CDU/CSU alliance ruled in a ‘grand coalition’ with the SPD from 2013 to 2017 and, with investors fearing a protracted power vacuum that could delay reforms in Germany and the European Union, she is pressing for a re-run of that arrangement.
But the SPD has shown reluctance, with some of its members favouring a looser cooperation agreement or supporting a minority government.