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My Profile Top News Reuters top ten news stories delivered to your inbox each day. Subscribe You are here: Home > News > International > Article Home Business & Finance News U.S. Politics International Technology Entertainment Sports Lifestyle Oddly Enough Health Science Special Coverage Video Pictures Your View The Great Debate Blogs Weather Reader Feedback Do More With Reuters RSS Widgets Mobile Podcasts Newsletters Your View Make Reuters My Homepage Partner Services CareerBuilder Affiliate Network Professional Products Support (Customer Zone) Reuters Media Financial Products About Thomson Reuters Merkel aims for quick coalition deal with FDP Mon Sep 28, 2009 2:25am EDT Email | Print | Share | Reprints | Single Page [-] Text [+] By Madeline Chambers BERLIN (Reuters) - German Chancellor Angela Merkel's conservatives vowed on Monday to seal a coalition deal, including tax cuts, with the pro-business Free Democrats (FDP) within a month after Sunday's election victory. Merkel's conservatives won a parliamentary majority with the FDP, her partner of choice, enabling her to end her awkward four-year-old partnership with the Social Democrats (SPD). Now the two center-right parties must try to forge compromises on a range of issues including tax, labor market policy and domestic security in Europe's biggest economy. "Coalition talks should start as soon as possible...and it is our goal to have a coalition deal in a month at the latest," said Ronald Pofalla, General Secretary of Merkel's Christian Democrats (CDU). The next government faces major economic challenges. It will have to consolidate a surging budget deficit, cope with rising unemployment and ward off a credit crunch. The stock market looked set to open flat. Pofalla said his party was sticking to its election promise of tax cuts. "We want tax cuts in two steps in the next legislative period which will result in relief of 15 billion euros ($22.03 billion)," he said. However, the FDP will push for a more ambitious programme. While Merkel has steadfastly refused to put a timeframe on her party's plans, given the dire state of public finances, the FDP campaigned for quick cuts worth 35 billion euros. The latest results put Merkel's conservative bloc, the CDU and Bavarian Christian Social Union (CSU), on 33.8 percent, their second-worst postwar result, down from 35.2 percent in 2005. But the FDP offset the losses, surging to 14.6 percent, its best ever score, and putting the center-right ahead. The SPD was the biggest loser and will join the Greens and Left party in opposition after plummeting more than 11 points to 23.0 percent, its worst result since World War Two. TOUGH TALKS The coalition talks between the parties could be tough, largely because the FDP will be emboldened to make demands after its strong showing. "Considering the strength of the junior partner, (the ideas) of that party will penetrate negotiations. That includes the simplification of the income tax system as well as tax relief," said Heino Ruland of Ruland Research in a note. The FDP is also widely expected to push for laws to make it easier for firms to hire and fire. Continued... View article on single page Share: Del.icio.us Digg Mixx Yahoo! Facebook LinkedIn Next Article: U.S. commander offers troop options for Afghanistan Analysis U.S. plan B for Afghanistan has its own problems While U.S. President Barack Obama wrestles with the idea of committing more troops to Afghanistan, a counter proposal is also on the table -- trim American forces and focus narrowly on counter-terrorism. Full Article | Full Coverage More International News U.S. commander offers troop options for Afghanistan Iran test-fires medium-range missiles: state TV | Video Qaeda's Zawahri praises slain figure in new message Honduras vows to close Brazil embassy, cracks down | Video Asylum influx a fresh threat to Australia PM Rudd More International News... 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