Angela Merkel has agreed a deal to form a new coalition government in Germany, four months after suffering damaging losses in elections.
The Chancellor reached an accord with her former coalition partners, the Social Democrats (SPD), after the longest period without an elected government in post-war Germany.
"This agreement can be the foundation of a good and stable government, which our country needs and which many around the world expect of us," Merkel said.
The deal could bring an end to months of uncertainty in Europe's biggest economy. But the relief turned to shock as Martin Schulz, the SPD leader, announced he would step down to become foreign minister. The deal comes at a significant cost to Merkel, who has had to relinquish control of three ministries of state and agree to a number of coalition demands.
And it still has to be approved by the full SPD membership. That result will be announced on March 4. Merkel has been fighting to remain in power since September's disastrous elections and the price she pays could be heavy, with her new government set to be much more active in pursuing greater European integration and reform and Schulz, the former European parliament president who has called for a United States of Europe, ensconced in Cabinet as foreign minister.
