German parties move closer to coalition

Germany’s two main political parties took another step toward a coalition with a deal to ease payroll taxes and labour market regulations in order to boost the lame economy, a senior negotiator said today.

Conservative negotiator Roland Pofalla said he had also reached agreement with Social Democrat Chairman Franz Muentefering to cut Germany’s crippling bill for unemployment benefits.

“What we promised in our election platform for labour and social security has been fully implemented,” Pofalla said on n-tv television.

Chancellor-designate Angela Merkel’s conservatives and the Social Democrats of outgoing Chancellor Gerhard Schroeder have been in coalition talks for weeks after neither won a majority in September elections.

The parties are expected to hike sales tax to help plug a huge budget hole while taking steps to boost the economy, whose slow growth has pushed the jobless rates into double figures.

The two sides aim to clinch an overall deal this week so that it can be approved at party conventions in time for parliament to elect Merkel as Germany’s first female chancellor on November 22.