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Merkel with Agreement to Raise Spending Without New Taxes

Chancellor Angela Merkel clinched a coalition agreement with the Social Democrats that calls for a national minimum wage and pledges to increase spending on pensions and infrastructure without raising taxes.

More than two months after Merkel won national elections, the accord reached shortly before 5 a.m. in Berlin today after 17 hours of negotiations, sets Merkel on track for a third term leading Europe’s biggest economy until 2017.

The coalition isn’t a done deal yet. It still must be passed by the entire SPD, which plans a referendum among its roughly 470,000 members. Der Spiegel magazine termed the vote an “incalculable risk” in a cover story this week. Ballots will be sent out at the end of this week and the result will be tallied Dec. 14-15. If the SPD approves, Merkel will be elected in parliament and sworn in on either Dec. 17 or 18.

Bloomberg [1]

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