Merz and SPD try to narrow differences in German coalition talks

By Andreas Rinke

BERLIN (Reuters) - Working groups for Germany's election-winning conservatives and the centre-left Social Democrats will submit findings on a possible coalition on Monday, a step toward forming a government and bridging differences over issues such as migration.

Chancellor-in-waiting Friedrich Merz wants to forge a ruling coalition with the SPD by April 20 but both sides have emphasised getting the substance of the talks right rather than toiling under self-imposed deadlines.

The two parties received a boost last week when the outgoing parliament approved plans for a huge state borrowing programme designed to revive economic growth in Europe's largest economy and build up its armed forces.

The conservatives and the SPD are likely to be the only viable coalition prospects in the new parliament, whose term begins on Tuesday. But differences remain that are mostly being hashed out behind closed doors.

The SPD has doubts over Merz's plans for tougher migration controls that include turning away asylum seekers at the border. For their part, the conservatives want to reform welfare payments and find savings in the budget, but the SPD has qualms over how deep the changes could go.

"I assume that everyone will naturally want to continue working with concentration, but we also don't want to put ourselves under time pressure," SPD General Secretary Matthias Miersch told RTL/ntv.

After winning elections last month, Merz had urged forming a coalition quickly, warning it is "five minutes to midnight" for Europe to fend for itself against a hostile Russia and with the U.S. no longer seen as a reliable ally.

Merz's tougher stance on migration reflects a changing political landscape, where the far-right Alternative for Germany (AfD) has surged to become the country's second-largest party.

Adding to the sense of the AfD breathing down the necks of the mainstream players, according to the latest poll by INSA on Sunday, the AfD climbed one percentage point to 23% support while Merz's bloc of Christian Democrats and Christian Social Union (CDU/CSU) fell by one point to 27%.

The poll also showed that nearly three-quarters of traditionally thrifty Germans, including 44% of supporters of the CDU/CSU, felt deceived by his borrowing plans.

The CDU/CSU has long cast itself as a guardian of financial prudence and during the election cautioned against opening the taps, only for Merz to unveil massive borrowing plans after winning the February 23 vote.

(Writing by Matthias Williams; editing by Mark Heinrich)